Future fuel fund - where to focus?

Evenergi has been lucky enough to work and collaborate on policy frameworks for future electric mobility right across all levels of government and the energy and mobility market in Australia. We have been fortunate to be able to learn from international experience, as well as create home-grown policy that will set us up for a sustainable and resilient transport future.

The Future Fuels Fund (FFF) announcement from the Australian Federal government comes amidst existing momentum from state governments such as NSW, South Australia and the ACT, all of whom were looking at their first forays into proactive grants programs for infrastructure and vehicles.

So how can this exciting development be best leveraged? The barriers to adoption are still fairly clear - vehicle availability, vehicle affordability, consumer awareness and infrastructure availability.

There are now good charging infrastructure plans being developed by South Australian Government, NSW Government, ACT and others - which map out charging requirements for regional areas. At the same time, groups of councils such as Central NSW Councils and the report we completed for the Gippsland region are creating a groundswell of detailed information from within regional communities. There is no question that harmonisation with these plans and funding "black spots" in charging infrastructure is a key initiative.

Evenergi's general view remains that vehicle availability and affordability are the key drivers for near term adoption during this period, where there is a lack of both in the Australian market. However the issue with simply providing grants as a solution is that the grant funding can only stretch so far - it is very expensive to subsidise vehicles so the current fund will not have enough of an impact at this stage in terms of a general market grant.

Some key approaches that can maximise leverage in this situation are:

  1. Focus on segments of the fleet that are closer to price parity today, support the infrastructure required and ensure supply is available.

  2. Focus on innovative product structures that provide certainty to buyers that the economic returns promised will be delivered.

NSW government's planned fleet incentive program is an excellent approach to this problem, using a reverse auction scheme to provide grants to fleet owners who are seeking to go electric. This is a great way to leverage funding - since focusing on fleets in the near term is likely to drive greater uptake, due to the focus on total cost of ownership (TCO) rather than up-front pricing in most cases. Therefore, fleets will feel a greater impact from these incentives at a lower cost to government.

In both these cases, we believe that heavy electric vehicle segments such as buses and garbage trucks present excellent opportunities for funding focus. Not only are heavy vehicles major emitters, we have manufacturing for these segments locally, the business cases make sense today, and there are some very firm commitments from state and local governments to transitioning.

In such segments, relatively modest capital allocation will go a long way to firm up the business case. It will require only that risk gaps are covered, rather than funding larger gaps in vehicle costs.

So the mix of funding for black-spot infrastructure with a focus on funding for fleet that are nearer price parity will likely be the most effective use of this exciting new fund.

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