Origin to tap into ‘tipping point’ for EVs

Origin Energy will offer fleets of electric vehicles to corporate customers through a venture that aims to tap the looming “tipping point” away from internal combustion engine cars and give fresh impetus to its push into new energy fields.
  1. Origin Energy will offer fleets of electric vehicles to corporate customers through a venture that aims to tap the looming “tipping point” away from internal combustion engine cars and give fresh impetus to its push into new energy fields.

    The joint venture with fleet management company Custom Fleet is intended to provide a “one-stop shop” for companies looking to go electric in their pool of corporate vehicles to help meet net zero emissions targets. Business fleets make up close to half of all new vehicles sales and are expected to lead the charge on electrification of road transportation.

    “We are approaching a time when the choice of EVs is greater and the price is less,” Origin’s executive general manager, future energy, Tony Lucas, told The Australian Financial Review.

    “We see EVs as a great opportunity. We think they will make up 20-plus terawatt-hours of load by 2040 and that one of the first converts will be businesses like our commercial and industrial customers, who have sustainability and emissions reduction targets like us.”

    The uptake of EVs has been famously slow in Australia in the absence of the sort of incentives from governments that have accelerated their adoption in many markets in Europe, North America and Asia. Only 0.6 per cent of new car sales in 2019 were EVs, according to the Electric Vehicle Council, leaving a big task in emissions reduction in transportation, the third-largest source of carbon emissions in the country.

    Still, adoption is increasing in Australia as battery costs decline, with the 2019 total of 6718 sales tripling from the previous year in contrast to a 7.8 per cent drop in petrol and diesel vehicles. It is expected to further increase as the range of cheaper models of EVs offered for sale increases and more charging infrastructure is installed.

    Citigroup said last month in a report that “the real EV arms race has now begun in Europe”, where manufacturers will need to double production this year of plug-in hybrid and battery EVs to meet EU targets for carbon emissions, with implications to flow on to other markets.

    The Origin 360 EV Fleet venture will provide tailored plans to roll out electric vehicles, the cars themselves, charging infrastructure at the workplace and at employees’ homes, and management of the cars and electricity load. The inclusion of carbon offsets ensures carbon-neutral travel.

    As running an EV fleet “requires a bit more coordination” than managing a pool of conventional cars, the venture will provide a comprehensive service that covers operating leases, registration, maintenance and load management, as well as experience on stakeholder engagement from Origin’s own adoption of EVs, according to Chau Le, Origin’s group manager,strategy and e-mobility.

    Brands of EVs on offer include popular models such as Hyundai’s Ioniq and Kona, the Nissan Leaf and the Renault Zoe. Custom Fleet, which is owned by Canada-listed Element Financial Corp – will provide the cars, while Origin will provide charging infrastructure and manage the load of the EV batteries on the grid, including optimising charging through its “virtual power plant” program.

    Ms Le said Origin is already aware of several business customers interested in putting EVs into their fleet as part of discussions in the course of a trial of EV smart charging launched last year and will now pursue those conversations and offer flexible packages.

    Origin wouldn’t comment on targeted uptake numbers or profitability of the venture but said it was expecting to build on its 30 per cent-plus share in the commercial and industrial energy retail sector to capture a slice of what it expects to be a growing EV fleet market. It has committed to switching its own 600-strong pool of passenger and light commercial vehicles to EVs by 2030, with 10 in the fleet so far.

    Ms Le said the economic attractiveness for a corporate customer depended on how many kilometres fleet vehicles drove in a year, with the cross-over point sitting at 20,000 kilometres to 25,000 kilometres a year, above which EVs are more economic because their higher up-front capital costs are more than made up for by lower running costs.

    The initiative comes as Origin and rivals AGL Energy and EnergyAustralia are being hit hard by soft wholesale power prices in their generation business as well as tough competition in the increasingly regulated energy retailing space. They have been expanding their initiatives in new areas of energy, including rooftop solar, batteries and hydrogen.

    Origin’s investments have included an investment in Octopus Energy and the use of that UK-based firm’s digital Kraken platform, which will in future be used to handle EV products for customers.

    Custom Fleet CEO Aaron Baxter said the company has built up “market-leading capability” in the Australasian region to support the take-up of EVs and that working with Origin would combine the strengths and expertise of each business.

    Origin’s smart-charging trial, which is being backed by an $838,000 grant from the Australian Renewable Energy Agency, involves rolling out 150 smart chargers to EV owners and fleets that will connect into Origin’s “virtual power plant” platform, which uses artificial intelligence to remotely co-ordinate batteries and boost their economics by shifting charging to lower cost periods.

    Origin estimates that 22 terawatt-hours of load on the electricity system will be from electric vehicles by 2040, assuming 40 per cent of all vehicles in Australia are electric by that time.

    Source: Financial Review