Coal giant and electric fuels ink deal to boost America’s charging network
One of the largest coal mining companies in the United States has taken a young electric vehicle charging company under its wing and will use its deep connections to open the doors to electric utilities across the country.
Alliance Resource Partners LP, which operates coal mines from Illinois to Maryland, said yesterday it would become a “significant minority shareholder” in Francis Energy, a charging company founded by the son of a prominent lobbyist in Washington. He first launched the deal last week in an earnings call and securities papers.
Both companies are based in Tulsa, Okla., and found each other there.
Oil companies have made strategic investments in the world of electric vehicle charging, but it has been relatively rare for major US coal companies to do so. ARLP did this in part because coal miners and electric vehicle charging companies share a key partner: the power company.
“We went to our contacts with utilities and our industrial customers and said… how can we do things that are not related to your coal purchases?” Joe Craft, president and CEO of ARLP, said during a call with investors last week. “And out of those conversations came the recognition that these utilities were going to have to support automakers and sell electricity through these charging stations.”
Both coal and electric vehicle charging stations are concerns of electric utilities these days, albeit at opposite ends of the continuum.
Coal remains a major supplier to US electric utilities, which are under pressure from activists, regulators and investors to shut down their coal-fired plants to address climate change. On the consumer side, the same utilities are realizing that electric vehicles could be both a solution to climate change and a great source of new electricity sales.
ARLP is the sixth-largest coal miner in the country, according to 2020 data from the US Energy Information Administration, producing nearly 27 million tonnes that year. Its mines in the Illinois and Appalachian coal basins are well positioned to supply coal-rich states from New Mexico to North Dakota to West Virginia.
This map overlaps with the objectives of Francis Energy, which wants to build charging stations in 35 states in the center of the country. In that lawsuit, he will seek some of the $7.5 billion in electric vehicle charging infrastructure that was part of last year’s bipartisan infrastructure bill.
An improbable load capital
Francis Energy bills itself as the nation’s fourth-largest fast-charging electric vehicle network, but with one major distinction: nearly all of its stations are located in Oklahoma.
The company deftly used a state tax credit — originally intended to support compressed natural gas stations — to build a comprehensive charging network in that state.
Electric vehicles are extremely rare in Oklahoma, accounting for one-third of 1% of light-duty vehicle registrations, according to Department of Energy data. Still, thanks in large part to the efforts of Francis Energy, the state now has charging stations roughly every 50 miles, more frequent than parts of California’s EV leader.
The state tax credit covered 75% of the construction costs of a charging station. Francis used the credit to build 118 charging spots in the state and to improve others he had already built, said Clark Wheeler, the company’s general counsel.
Francis Energy also seized another funding source, the federal Volkswagen “Dieselgate” settlement, which punished the automaker for its emissions cheating scandal. Each state received a portion of these funds.
In Oklahoma, Francis Energy received more than $1.3 million of that money in 2019, more than half of the state’s annual total.
Now, Francis Energy’s plan is “expanding into neighboring states,” Wheeler said.
Again, the effort is matched with public funding. The company recently won public tenders to build stations in New Mexico, Missouri, Kansas and Alabama, and has other efforts underway in Ohio and Arkansas.
The relationship with the ARLP will help. “They are a supplier for a lot of big utilities. Utilities are critical to building this charging infrastructure,” Wheeler said.
Both companies have other investments that move into the other camp: from electric vehicle charging to fossil fuels, and from fossil fuels to charging.
Last week, ARLP disclosed that it had taken a stake in Infinitum Electric, a Texas-based maker of super-efficient electric motors. Last year, Francis Energy secured support from Getka Group, an oil and gas company in Tulsa.
ARLP also intends to use Francis Energy and Infinitum as a test case for an artificial intelligence platform it began developing two decades ago to improve safety in coal mines.
This platform, housed in a subsidiary called Matrix Design Group, “aims to position the company to be competitive in the energy transition space,” according to a company securities filing. Applications include electric vehicles and energy storage.
Okla Connections. to DC
The two companies said they met through social circles in their hometowns of Tulsa, Okla.
“I have known several members of the management of Francis. I knew their parents. So I’ve known the families for a long time,” ARLP chief Craft said on the investors’ call last week.
Francis Energy takes its name from Francis Oil & Gas, an upstream development company founded by an entrepreneur named Sam Miller in 1930s Oklahoma.
Miller’s great-grandson is David Jankowsky, the founder of Francis Energy.
Parentage has also played a more recent role. David’s father, Joel Jankowsky, was one of Washington’s ‘three lions’ lobbying world when he retired in 2019, according to a profile in Call.
Young Jankowsky grew up in DC. He attended Potomac School, a private elementary and secondary school in suburban Virginia, and earned his law degree from Georgetown University. He then became a lawyer specializing in the financing of energy projects at Skadden, Arps, Slate, Meagher & Flom, then an executive at the solar company SunEdison Inc. in Singapore. Young Jankowsky founded Francis Energy in 2015.
Francis Energy’s commercial director, Ashton Valente, studied law under Jankowsky and is also a former Skadden lawyer.
The connections in the two cities run deep.
“Tulsa is a small town,” said Wheeler, who said her family was also part of the same network.