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Siemens offerings combining finance with technology for operators

Siemens Australia electric charging infrastructure lead Olivia Laskowski says Siemens has globally turned its hand to the financing side of the zero-emissions bus equation

Electrifying a traditional depot can be a daunting challenge for any operator, and success means more than just installing the physical infrastructure — getting the financing right for such a move can be crucial. This is why it’s important for operators to not only choose the best technology provider, but also a financing partner who understands the technologies involved and the most suitable options available to pay for it as well.

Challenges in retrofitting inner-city depots with limited space and existing infrastructure are well-known. Meanwhile, the cost of switching to an electric fleet can be prohibitive, even with government assistance, and some private financiers may be reluctant to invest in a nascent area.

There is certainly strong support for a switch from the Australian public, with polling from the Australia Institute finding that 71 per cent of Victorians support a zero-emissions bus fleet by 2030. The state has more than 40 electric buses on the road, with a policy for buses purchased from 2025 onwards to be electric.

According to the Electric Vehicle Council, there should be around 2000 electric buses on Australian roads by 2030 based on current announced commitments by states and operators. However, this figure represents only around 2.5 per cent of total busses and coaches in Australia. To propel sustainability and for the energy transition to be part of our everyday lives, the pace of change needs to pick up, fuelled by the right technology and finance offerings.

Such change is already happening in more mature markets including in sites across the European Union, the United Kingdom, North America and China, where operators face similar challenges to those experienced in Australia. In many cases, they are even more daunting.

Historic town centres, listed buildings and limited space are just some of the obstacles they have to overcome to switch their fleets. Such challenges may also be overcome in Australia.

The role of digitalisation in the transition should not be underestimated, since it can smooth the path for operators.

Digitisation plays an important role in initial planning, by allowing for the analysis of data such as routes, available energy at the grid edge, existing IT infrastructure, physical space and boundary conditions. Getting this right from the start gives a project the best chance of success.

Software provides the ability to understand and manage the operations of electric buses and charging infrastructure. In particular, significant operating cost reductions are achieved with load management software employed to reduce electricity costs.

RELATED ARTICLE: Siemens recaps incredible zero-emissions infrastructure journey

The aim to future-proof investments against technology obsolescence may also cause operators to baulk at switching their fleets. The state-of-the art in charging technology is rapidly evolving. However, the solution is not to infinitely wait, but to seek a more flexible approach that easily and cost-effectively allows for the integration of new technologies.

However, technology is only part of the ecosystem; upfront and ongoing investment is required in physical infrastructure and digitalisation over the life of the assets.

Beyond government subsidies and grants, the right financing for an operator can depend on the business model they are considering, including the ownership of assets. For example, does the operator want to own the bus and charger assets, or have a third party own them, with the operator using them? Or does the operator want to own the electric buses, but would prefer the charging service to be provided and maintained by another party?

For operators looking to make the switch to e-mobility, there are different financing routes available, including debt, where an operator borrows money, through to equity, where the investor takes a share of ownership of the company in return for their investment.

Companies offering innovative, emerging solutions typically start out with equity financing, before moving to debt as they build out their customer base and grow revenue. Equity financing could also be relevant when strategic partners with complementary expertise come together. More established operators can consider more mature solutions such as debt financing once some scale and a track record of success are achieved.

With so many solutions available to operators looking to finance e-mobility transitions, it is worth considering a financier’s knowledge of the technology available, specifically when it relates to electrifying mass transit and sustainability.

A financier who understands someone’s business is beneficial, no matter what endeavour they are involved in, since they both speak the same ‘language’ and understand the unique challenges involved. It also helps when visions align, and they are both working towards the same goal — in this case, the electrification of fleets and a reduction in greenhouse gas emissions.

Choosing the right financing partner can speed up the transition and help governments and the private sector meet their emission targets, by enabling projects when operators would otherwise shy away from investments. It also allows already established players to scale up.

As an integral part of Siemens, its financing arm Siemens Financial Services (SFS) offers tailored financing solutions to operators looking to switch their fleets, making use of its financing know-how and its industry expertise when it comes to technology and market conditions.

A great example is how SFS was able to support Zenobē Energy Limited, who is playing a key role in the UK government’s commitment to reach 100 per cent zero-emissiosn electric buses by 2030 by providing turnkey solutions for electric bus fleets. The company owns and operates the largest share of the UK’s operational electric bus fleet and has one of the largest operational battery storage portfolios.

When it needed financing to support its future growth and consolidate its market position, SFS was one of the financiers for a £241 million loan where the company utilised technology solutions provided by Siemens’ Smart Infrastructure (SI), given their deep knowledge of the technologies involved, the associated costs and the potential revenue streams.

On the equity side of the equation, SFS was also able to support Canada’s Switzer-Carty, who is a market-leading provider of student transportation across Ontario. Switching to an electric fleet was a natural decision for the company, given its strong environmental, social and governance (ESG) commitment.

Along with a minority equity investment from SFS, Siemens signed a collaboration agreement with Switzer-Carty to support its fleet electrification strategy with technical know-how, hardware and software. The funding meant Switzer-Carty had access to resources that allowed a transition to a sustainable fleet while reducing carbon emissions, air and noise pollution.

Both examples demonstrate that when Australian operators decide to transition their fleets, they can benefit from partners who successfully integrate technology with finance, enabling them to tailor solutions to their needs. Financing partners such as SFS have the depth of knowledge to understand the challenges and opportunities involved in the transition to electric bus fleets. Combined with the vision of operators looking to electrify their fleets, it can be a recipe for success.

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