Converting a fleet from fossil-fueled to electric is a lot more complicated than simply buying new vehicles.
The electric cars, trucks and buses need carefully scheduled charging to ensure they have sufficient fuel for their duties. And the charging itself must juggle demand charges and time-based rates, which vary from one utility territory to the next.
Running afoul of electric rates produces embarrassing outcomes that undermine the arguments for vehicle electrification. An electric bus fleet in Denver, for instance, ended up costing the transit agency 60 percent more per mile to operate than diesel buses, due to hefty demand charges, The Denver Post reported last year. Those charges piled up even though the agency charged overnight and staggered when buses plugged in.
New startup Amply Power wants to resolve these complexities so fleet operators don't have to.
The company manages fleet charging on behalf of the customer, delivering miles of charge at a fixed price for a multi-year contract. Behind the scenes, Amply wrangles the necessary infrastructure upgrades and optimizes charging operations around driver needs and utility rates.
The company is still early-stage, having officially launched in April. But it has an experienced founder and CEO: Vic Shao, who launched commercial energy storage company Green Charge Networks and sold it to Engie in 2016.
Shao quickly raised $3.8 million from Obvious Ventures, Congruent Ventures, Kitty Hawk Ventures and PeopleFund, and the company joined the L.A. Cleantech Incubator. He also formed a non-exclusive partnership with electric bus manufacturer BYD, to package charging-as-a-service alongside that company's bus sales.
"Fundamentally, electricity needs to be lower-cost than diesel for fleets to adopt," Shao said in a November interview. "If you do it correctly, it does work out that way."
Grid-savvy approach to EV fleets
Amply is chasing deals with transit agencies, university fleets, private company shuttles and school buses, all over the country.
The company studies a customer's facilities and utility rates to calculate a cost per kilowatt-hour delivered, which translates into a set price per mile driven. The customer locks in that rate for a five-to-12-year contract, with 12 years being a typical lifetime for a bus. The result is akin to a power purchase agreement for a solar power plant; the more electrons flow, the more money Amply makes. Then it's up to Amply to actually deliver power in the most cost-efficient manner.
Doing so requires a systematic approach. One must interconnect and install chargers, but the real trick lies in scheduling the charging sessions to optimize around time-based rates, while ensuring that mission-critical vehicles have a full battery when they need it.
That's not a skill set that fleet operators typically have in-house; Shao is betting that they will be happy to outsource it to grid wonks.
"We live on tariff rates and kilowatt-hours and demand charges, this is the language that we speak internally," Shao said.
The service could also appeal to fleets that have tried out a few electric vehicles, but worry about the added complexities of charging an entire fleet. The more power flowing, the greater the risk of hefty demand charges.
In an actively managed scenario that avoids charging during the priciest hours of peak grid demand, Amply can deliver electric charging at a rate 30 to 50 percent cheaper than diesel, Shao said. That doesn't count the initial capital expenses to install charging equipment.
"Even baking in the upfront costs, a lot of our proposals have levelized costs comparable to the cost of diesel," Shao said.
The cost of charging equipment will fall as the industry scales up. In the mean time, Amply helps customers track down grants and subsidies for zero-emission transportation, which bring down the out-of-pocket expense. And if the customer doesn't want to worry about financing the infrastructure expenses, Amply will take care of that as part of the package.
As a veteran of the commercial energy storage industry, one might expect Shao to include batteries to buffer intense spikes in electricity use, which can trigger expensive demand charges for businesses. But Amply is not including batteries yet, he said; they're still too expensive for these sorts of projects, and clever coordination delivers much of the necessary economic benefit.
"We are so confident in our solution and our software and capabilities that we will take over the end customer's utility meter in our name, so that we are paying the electricity bill and we are taking on the risk of demand spikes," Shao said.
Betting on Shao
The new business model draws on Shao's experience running Green Charge, which installed batteries at commercial sites to manage demand charges.
Both businesses required arranging financing for wonky grid infrastructure investments, and then pitching commercial customers on solving a grid problem they might not entirely understand. Green Charge also built its own control software around third-party hardware, sidestepping competition with manufacturers.
The subsequent birth of Amply offered an unusually clear example of the adage that a compelling founder and a good idea are all you really need to win checks from venture capitalists.
"When we go this early, what we really look for is an entrepreneur’s skill set and their match to the challenge in front of them," said Abe Yokell, co-founder and managing partner at Congruent. "We were willing to back [Shao] when it was literally just him."
It didn't hurt that Green Charge's exit produced "one of the better financial outcomes" in the annals of energy storage startups, he added.
"They made a real return for their investors," Yokell said. "I actually think that this opportunity is much bigger."
Initial contracts have already gone live, Shao said, and revenue is coming in, but few details have become public so far.
Besides the BYD partnership, Amply closed a deal with Pacific Current, the unregulated arm of utility company Hawaiian Electric Industries, to coordinate fleet charging on the islands. That alliance hints at more to come: if utilities can make fleet electrification easier, they stand to deliver more electricity.
In New York, Amply won a $500,000 grant to demonstrate its charging-as-a-service model for an electric school bus fleet. And the company is on the demonstration track for Elemental Excelerator in Hawaii, although it hasn't disclosed details about that project.
"I feel good about the contracts they have, and I feel very good about the pipeline," said Yokell.
As for scaling, Amply's costs lie in designing the control software and paying personnel to close deals and oversee projects. It keeps the expensive infrastructure costs off the balance sheet with various financing partners. And this particular niche of the EV charging market hasn't drawn a lot of competitors.
Amply has steered clear of public charging, where companies like ChargePoint and EVgo compete to make chargers accessible to the EV-driving masses. And it differs from software providers that give customers the tools to run their own stations; Amply's job is to take that responsibility out of the customer's hands.
After Shell acquired charging startup Greenlots last year, VP of New Fuels Matthew Tipper told GTM that corporate, municipal and utility fleets offered "the more scalable opportunity."
As a fuel supplier, Shell could appeal to existing customers who want to take a phased approach to transitioning their fleets to electric. But it's not clear if Shell has closed these sorts of deals yet.
A few other brands have expressed interest in the "pay for miles driven" model. Schneider Electric-backed startup eIQ Mobility advertises a "fixed price per mile" and help setting up "everything but the driver." And Irvine-based startup In-Charge lets customers pay "by the project, by the month, by the mile, or by the kilowatt-hour."
The concept remains a new addition to the market, though, so market share is up for grabs. To capitalize on an early start, Amply now has to prove it can execute on its initial contracts, while keeping costs low enough to be profitable.