The future is green

Apex Rail have been working closely with industry expert from the manufacturing and operational side to develop insights and strategic approaches to deliver Green Energy Solutions (“GES”) to the Rail Sector in both Rolling Stock and Infrastructure. Our aim is to reduce diesel emissions through modern technology and “hybridisation” or to completely replace diesel engines with electric, battery or hydrogen technology and combinations of those. Despite already being a relatively environmentally friendly mode of transport, the rail industry is being challenged by increasing regulatory and political pressures to cut diesel power emissions across the rail network, particularly in the urban and partially electrified areas. Whilst the European Union has set ambitious targets for a net-zero GES by 2050, there are individual EU member states and the UK, who are moving even faster to ban diesel powered rolling stock. The sector has therefore an increasing need to finance sustainable modus of rail transport, but with the challenge of limited funding and subsidies both from the EU centrally, and individual states within the EU.

Apex Rail is on the forefront of financing the latest sustainable modes of rail transport, by actively advising operators, manufacturers, and investors, on different projects both in rail passenger and rail freight transport.

Examples:

1. In the UK we have supported an established infrastructure investor in investing into various fleets for the Wales & Border (W&B) franchise. The tram-trains (Stadler CITYLINK) feature an innovative battery-electric drive, eliminating the need to fully electrify the network on which they run. Part of this investment was in tri-mode trains (Stadler FLIRT) that features the possibility to drive on overhead lines, diesel power, or on batteries, making them very versatile to use in the W&B network. Currently we are still involved in this transaction, supporting the investors in the commercial and contractual management of the four W&B fleets. Apex Rail is actively advising on other passenger train procurement in the UK both for new diesel-battery multiple units (“Hybrids”), and new tri-mode intercity trains in different UK concessions.
2. In Germany Apex Rail has also been involved in advising the financing of passenger trains with innovative technologies, such as battery-electric Astom Coradia BEMU’s, ordered in 2019 by Verkehrsverbund Mittelsachsen and on behalf of a structured operating lessor we advised on the potential financing of new battery-electric and hydrogen-powered trains from Siemens in the North-East of Germany.
3. In rail freight, Apex Rail is very active supporting manufacturers, operators and investors across the full range of locomotive types, from re-repowering older diesel locomotives with the latest and cleaner technology (i.e. the Class 56 locomotives for GBRf in UK), the acquisition and operating lease financing of state of the art tri-mode BoBo locomotives from Stadler Rail for another UK freight operator), to supporting a major European rail manufacturer during the introduction of an innovative hydrogen solution for the rail freight sector, that will eliminate greenhouse gas emissions by 100%. In this case we have raised the operating lease financing to establish a dedicated funding solution for the operators, and that will include this new technology in their operations together with electric locomotives that replace diesel traction.
4. There are many potential projects that will include changes in traction technology or additional infrastructure which will need to be installed and therefore financed. This includes battery charging stations, hydrogen tanks, and storage infrastructure.

Introducing and financing new technologies that lack longer-term experience, requires special consideration when it comes to a financing approach. For example, financiers find it difficult to assess the long-term residual value and market demand of rolling stock with new technology, and they need to be provided with the right comfort to be able to participate in the financing in a competitive manner.

These and many other challenges in the financing of new technologies in the rail sector have been solved by the experienced team of Apex Rail. If you plan to acquire or invest into such new technologies in rolling stock or related infrastructure, please get in touch with us! We would be delighted to support you.

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