Big investors amp up California's port truck-charging plan
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[April 17, 2023] By
Lisa Baertlein
LOS ANGELES (Reuters) - California's bustling seaports, dominated by
massive container vessels and soaring cranes, may seem an unlikely
setting for investors seeking to capitalize on the "green" revolution.
But thanks to the state's plan to phase out by 2035 heavy-duty diesel
trucks that haul containers to ships and warehouses, the ports have
become ground zero for forward-looking investors who are lining up to
build charging stations for the electric semis that will eventually
serve those trade gateways.
Among the companies pouring in money are real estate firm CBRE Group
Group, warehouse giant Prologis Inc and investment manager BlackRock
Inc, who are eying a payday when replacement trucks are in wider use.
The California Energy Commission (CEC) estimates the state will need
157,000 medium and heavy-duty chargers by 2030 to support a range of
trucks - including some 30,000 drayage rigs that ferry cargo from ports.
It has dedicated $1.7 billion to build those chargers and estimates
there are 1,000 already in use by semis and buses.
The United States has been slower to embrace electric vehicles,
including electric semi trucks, than Europe and Asia. Drayage, or the
transport of freight from an ocean port to a destination, is the sector
best suited to begin closing that gap. That is because the shorter, more
predictable round trips in this type of transport match the battery
capacity of existing rigs or hauling trucks, which can be charged
overnight in company yards rather than with fast highway chargers that
require more energy and infrastructure.
"The challenge is land and power," said Rob Shaw, managing director of
private infrastructure at CBRE Investment Management.
Oakland, California-based startup Forum Mobility in January announced a
$400 million joint venture with CBRE Investment Management and
Homecoming Capital to build electric charging infrastructure to support
the drayage industry. Meanwhile, BlackRock is part of another group
investing $650 million to build chargers along freight routes.
The nation's busiest port complex at Los Angeles and Long Beach has a
smattering of heavy- and medium-duty chargers for truck drivers. Because
port real estate is at a premium, most early drayage charging projects
will be "behind the fence" on trucking company property, experts said.
CHICKEN-AND-EGG
The push by CBRE and other real estate and infrastructure investors
could help overcome a "chicken-and-egg" electric truck adoption lag in
the United States, said Henrik Holland, global head of Prologis
Mobility. Electric trucks cannot operate without chargers, but it does
not make sense to build chargers if drivers are not using electric
trucks.
Prologis, the biggest U.S. warehouse owner, created its mobility
business to install electric truck chargers and solar panels. Warehouse
tenants in Southern California's freight corridor are subject to clean
air rules that require them to offset pollution from trucks that visit
their facilities.
Prologis already has put a total of 38 dual-port chargers from
Swedish-Swiss manufacturer ABB Ltd on two Los Angeles-area properties
for a warehouse and distribution business owned by shipping giant Maersk
that is switching to an electric fleet.
"A marriage between real estate and energy infrastructure" will be
needed to accelerate the transition to electric-powered trucking,
Prologis Mobility's Holland said.
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A Hight Logistics electric BYD semi
truck is seen being loaded with a container at the seaport in Long
Beach, California, U.S., April 4, 2023. REUTERS/Lisa Baertlein
Stung by the lack of public chargers, major electric truck makers
are jumping in to build the infrastructure needed to underpin big
rig sales but it will take time.
"Project lead times for depot-based fast charging are currently
being measured in years, instead of weeks or months," said John
O'Leary, CEO of Daimler Truck Holding AG's Daimler Truck North
America.
The electric truck manufacturer joined with BlackRock Renewable
Power and NextEra Energy Resources on a $650 million venture to
build high-performance charging sites on critical freight routes in
Southern California, the U.S. Northeast and Texas, the sites of
major seaports.
Multiple industry officials said permitting and approvals on the
electrification side are a limiting factor. Nevertheless, they
believe there will be enough chargers for port trucking by 2035
because the projects are less complex.
"2035 is 12 years out ... a lot can be done in that time,"
infrastructure consultant Charlie Allcock said.
POWER PLAY
Industry officials agree the success of commercial truck charging
projects hinges not on power generation but on connecting sites with
needed energy.
"Right now you can go order a vehicle, have it manufactured from raw
materials and then delivered to you faster than the average line
extension takes," said Greg Sarvas, electric transportation program
manager at the Los Angeles Department of Water and Power, referring
to the process of bringing power to a site.
Getting in front of demand is difficult since energy regulators
require power companies to build to need rather than to forecasts,
utility executives said.
"That puts us in a little bit of a crunch," said Chanel Parson,
director of building and transportation electrification at utility
Southern California Edison, owned by Edison International.
Transmission line installations can take months to years, utility
executives said. Beyond that, power companies must grapple with
shortages of key parts including some transformers and switch gear.
Meanwhile, the search is on for sites with excess power, known as
"headroom," to accommodate charger projects.
Hight Logistics President Rudy Diaz said the Forum Mobility team
that oversaw his electric charger project in Long Beach found "a
needle in a haystack." A previous tenant, he said, had installed an
800-amp panel to run the broken-down hay bailer in his warehouse.
That defunct equipment was wired with enough power for 80% of the
first phase of his drayage electrification project. Diaz had four
dual-port chargers made by Tellus Power Green up and running in
under a year.
"It's a relic," Diaz said of the dusty bailer. "Bless that thing."
(Reporting by Lisa Baertlein in Los Angeles; Editing by Ben Klayman
and Matthew Lewis)
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