Electric Co-ops Move Ahead by Embracing EV Technology

New equipment financing arrangements drive expansion of EV charger stations

You don’t have to be billionaire Elon Musk of Tesla fame to appreciate the spectacular growth of the U.S. electric vehicle market. Despite last year’s COVID-related stall out, EV sales are soaring. Through the first quarter of 2021, in fact, sales had skyrocketed at an 81% clip, far outpacing the rest of the U.S. auto industry.

For leaders of some particularly forward-looking electric cooperatives, booming demand for EVs has been music to their ears. These co-ops continue to serve residential and commercial members in the traditional sense with electricity and broadband. Today is different, though, in the newfound success they have experienced by providing innovative services that had not existed before the EV revolution.

Case in point: MidSouth Electric Co-op, headquartered an hour’s drive northwest of Houston, TX. Understanding that EVs are here to stay and that charging an EV outside of metro areas can be a challenge, MidSouth has taken steps to improve access to reliable and convenient charging stations for its members in the six-county area it serves.

Getting into the EV charging business was a deliberate, strategic move on MidSouth’s part, according to Troy Morris, senior vice president of operations. A large portion of the co-op’s service territory is densely populated and includes diverse communities of professionals, such as those in oil and gas. Nearby Conroe, TX, a city adjacent to Houston, is also one of the nation’s fastest growing metro areas.

“We’re in a hot market for EVs, close to an interstate highway and a major lake. Demand will only continue to grow in our service area as people become more familiar with EV technology and the price point of these vehicles comes down,” Morris said. “We’ve already seen that EVs are not only for downtown city dwellers, they’re also for those in rural areas who need to commute.”

We’ve already seen that EVs are not only for downtown city dwellers, they’re also for those in rural areas who need to commute.

Leveling the EV field

EV chargers typically fall under one of three main categories: Level 1 charging stations, which use a standard 120V household outlet and supply roughly 3 to 5 miles of range per hour of charge; Level 2, which take in a voltage supply of over 200 volts at a rate of 12 to 60 miles of range per hour; and Level 3, which allow for very fast charging in a much higher voltage. A single Level 3 “DC Fast Charger” can cost $50,000 or more to purchase and install, which is why they aren’t used for individual residences. However, on the go, Level 3 users can charge some EV plug-in vehicles to 80 percent in a charge time of 20-30 minutes.

MidSouth is strategic about where it places its charging stations. The co-op currently operates two Level 3 chargers and has installed them in highly traveled “in and out” areas. MidSouth has also placed three Level 2 chargers, with another in the process of being installed near Highway 6 between Houston and College Station. Level 2 stations are more appropriate for drivers who make one- to four-hour stops at places like movie theaters, dental offices, shopping centers or hotels. The type of vehicle being driven (i.e., Tesla vs. a Ford Lightning) and the technology in that vehicle will dictate how fast and long the EV battery charges.

At this point, MidSouth doesn’t know exactly how many of its members own EVs, but it does monitor usage of its charging stations. In April alone, there were 51 unique vehicles that had 109 sessions at those stations. “For us, those are numbers to pay attention to,” Morris said. “Also, in talking with people, we’ve found that they’re very appreciative of our charging stations. They really do their research to plan their road trips and in no time at all get very familiar with these stations and the apps associated with them.”

Charger financing made easy

Typically, leasing can make good financial and business sense for electric distribution co-ops that finance utility equipment, as the real value of equipment lies in using it, not owning it. MidSouth’s leaders point to a relatively new type of leasing arrangement with its longtime lender, CoBank, as key to getting its now successful EV charger program off and running.

“In the past we’ve sought out financing for longwinded assets such as power lines, electric wire, things like that,” said Andy Dallmeyer, MidSouth senior vice president. “EV chargers are a different creature. There’s great value in leasing them because it helps align our payment streams within a shorter term, in this case, 3 to 5 years of life.

“As our financing partner, CoBank, has demonstrated for years—through good times and difficult ones as well—it offers the most flexible terms and most competitive leasing rates,” Dallmeyer said. “Their people are also quite knowledgeable and resourceful, so when the time came to finance EV chargers, a whole new service for us, leasing with CoBank was a no-brainer.”

Financing of EV chargers represents a relatively small but fast-growing segment among the broad range of rural business products offered by CoBank’ subsidiary, Farm Credit Leasing, which provides equipment financing services, according to Mike Cowley, CoBank lead relationship manager for MidSouth.

Their people are also quite knowledgeable and resourceful, so when the time came to finance EV chargers, a whole new service for us, leasing with CoBank was a no-brainer.

“Compared with light and heavy-duty vehicles, buildings and facilities, processing equipment and the like, EV chargers are not big-ticket items,” Cowley said. “CoBank FCL started out financing everyday pieces of utility equipment such as trucks, backhoes and trailers, but as vehicle technology has evolved and grown, we’ve also moved into EVs and EV stations, with MidSouth being an early adopter. Our customers appreciate that we continue to meet all of their financing needs, even for the latest equipment. With the variety of term options available and competitive rates we offer, we can always match up the lease to the desired asset life and meet the co-op’s needs.”

One attractive aspect of the financing that CoBank FCL offers for customers like MidSouth is fixture financing with no landlord waivers. Translation: unlike a standard loan or lease program for co-ops, under this unique lease arrangement, the site location of the asset – in this case, the EV charger station—does not need to be located on co-op property. As long as CoBank FCL has the site owner’s consent, then 100% of the asset cost can be financed. This gives the co-op the flexibility to expand its charging center locations without having to negotiate a ground lease with the property owners.

  • Other advantages of financing with CoBank FCL include:
  • Terms of up to five years;
  • CoBank FCL pays the vendor directly, helping the co-op preserve cash and fix the rate of the debit; 
  • EV charging stations are structured with a $1 purchase option at end of lease term; and
  • The process CoBank FCL has put in place helps ease documentation for the co-op.

While flexible terms and low, competitive rates weighed heavily into MidSouth’s decision to partner with CoBank FCL in the financing its EV chargers, the lender’s high level of service and vast experience in arranging co-op financing made all the difference, Morris said.

“For comprehensive leasing solutions, CoBank FCL have always been good about being extremely knowledgeable and as resourceful as possible,” he said. “That’s why we come back to them time and again.”


CoBank Farm Credit Leasing offers a range of flexible equipment financing options for vehicles, equipment and facilities that can deliver significant benefits to rural and utility businesses.

Contact your CoBank relationship manager today to learn how we can help in the financing of a wide variety of the assets needed to run your business effectively.