Who will lead the charge?
Uptake of EVs expected to increase
New Zealand is currently lagging behind much of the developed world in the uptake of electric vehicles (EVs), with our monthly registrations being around half the global average. Despite this, EVs are appearing in increasing numbers on our roads.
Assisted by the Government’s Clean Car Discount Scheme, it appears that this decade will see an ever-steepening curve towards mass adoption of EVs in New Zealand, as we work towards reducing CO2 emissions and achieving the Government’s target of zero net accounting emissions of greenhouse gases (other than biogenic methane) in a calendar year, by the year beginning 1 January 2050.
More EVs require more charging facilities
With an increased adoption of EVs, the need for convenient and available charging facilities, and time opportunities for charging, will correspondingly rise.
Internationally there are calls to work towards a target of 1 charger per 10 EVs.
We expect the main locations for charging stations will be:
- Home chargers – which enable top up charging overnight for those with their own garages or parking spaces.
- Publicly accessible chargers.
Publicly accessible chargers are becoming more available. These are currently available on the country's highways approximately every 75kms, and parties such as EECA, MOT, NZTA and MBIE are working together on plans for New Zealand’s future EV charging network.
Outside of the higher density areas, and for longer distance trips, public chargers will be essential. However, with the charging times involved and increasing demand for their use as the number of EV vehicles rises, public chargers alone are unlikely to provide the complete solution, particularly in the urban context.
Charge while you work
Many cars continue to sit idle in work carparks during the day.
As highlighted in the first of our Sustainability Conversation Starter series, we anticipate an increase in open dialogue between landlords and tenants on a wide range of sustainability matters, including the availability of low emission transport options. As things like EV chargers move further up the ‘wish lists’ of tenants looking for new premises, we are starting to see them (or at least the wiring to facilitate their installation in the future) appear in many new builds. They are also a regular feature of upgrades to existing buildings, especially where the landlord is seeking to attain Greenstar, NABERSZ or similar accreditation.
However, in leases of existing buildings under the more standard lease model, the equation is not quite as simple as:
Tenant demand = more EV chargers.
Issues and possible solutions
- CAPEX. While Government incentives are being provided for personal electric vehicle use, nothing as yet has been provided to incentivise businesses/landlords to provide EV charging stations. Most leases do not allow the landlord to recover the capital outlay of installing improvements such as EV chargers directly from the tenant or tenants, but increased building amenity/facilities may well support a higher rent on review. Also, some electricity providers and/or tenants pushing for environmentally friendly improvements like EV chargers may be prepared to pay for, or towards, the upfront costs. Where the tenant (or a provider) pays, consideration does need to be given to the rights and obligations of both/all parties at the end/termination of the lease though (for example, in relation to removal/reinstatement etc.).
- Allocated car park spaces vs general use. Many leases that include rights for the tenants to use shared-use car parks do not allocate specific spaces to specific tenancies, which of course could be a problem if a tenant has paid for/towards to costs of installing an EV charger, but there may well be a lease provision allowing the landlord to make new arrangements in relation to the car parks (usually subject to certain provisos). From a tenant’s perspective, if you are picking up the costs of installing an EV charger, you will want to ensure that same clause in your lease is adjusted so you can’t be relocated to a space with no charger. From a landlord’s perspective, only providing EV chargers to specific tenants linked to allocated spaces, could be a case of ‘kicking the can down the road’ – and it would be prudent for landlords to give thorough consideration to the expected increase in demand, and the need for general use charging stations going forward.
- Electricity – user pays vs outgoings. In multi-tenanted buildings, initially at least, user pays (i.e. the EV charger has a meter or similar) may be the solution to avoid non-EV users complaining about increased OPEX but, logically, as demand increases, a switch to OPEX is likely to be met with less resistance.
- Insurance. If the tenant pays for the EV charger, although located within the car park, it may be treated as a tenant fixture and fitting, and adjustments might need to be made to the existing insurance held by both landlord and tenant.
- Other lease terms. Again, a lot will depend on who pays for, and owns, any EV charger(s) installed, but most leases would need some adjustment to deal with the tenant owning equipment/improvements outside of the premises (for example, in relation to repair/maintenance and replacement (and access to carry that out), security, statutory compliance etc.).
While there are issues, even obstacles, we do not believe they are necessarily insurmountable, and often may just be opportunities for more conversations between landlords and tenants about their respective sustainability wants and needs. Where the parties involved can reach agreement on a solution that works for them both, leases (like any contract) can be tailored to suit, and any one of our experts would be happy to assist you with advice on what the terms of your existing lease allow you to do, and/or drafting a new lease (or varying an existing one) to help you ‘lead the charge’.
Co-authored by Abi Crawford, one of the Senior Solicitors, and Erin Wylde, one of the Solicitors, in our Property team.