The second iteration of Utility Week’s Accelerate event asked how the UK can put the electric pedal to the metal to rapidly decarbonise transport while avoiding unintended consequences for the market and consumers.
How to manage the transition to an electrified transport network is one of the grand challenges of our generation. If we get it right, the benefits could be enormous, releasing economic value in myriad ways, improving public health through reduced air pollution and slashing carbon emissions.
But the potential to miss out on these benefits and swerve into destructive potholes by getting rollout and adoption strategies for electric vehicles (EVs) wrong is also significant. At Accelerate19 – an event created from the collaborative efforts of Utility Week, Network magazine and their sister title for energy and sustainability managers, the website edie – this delicate balance of risk and opportunity was the driving force behind a set of animated industry debates.
The event – supported by Centrica Business Solutions, Cognizant, MINI and UK Power Networks Services – brought together a range of different stakeholder groups in the transition to EVs, with the aim of supporting collective understanding of the challenges and interests being eyed by each.
As well as participating in roundtable debates and sharing core outputs from these, delegates at Accelerate gained the opportunity to hear from expert technology and consultancy players in EV adoption, and learned about the latest work of the Electric Vehicle Energy Taskforce, a government-commissioned initiative led by ex-BP leader and current chief executive of the Energy Systems Catapult, Philip New.
This insight captured many of the overarching challenges that stand in front of a vibrant EV future in the UK. Predominantly, these stem from fragmentation and complexity in an EV landscape that includes vying interests from auto manufacturers, charging providers, EV service and energy tariff providers, local authority leaders, data companies, asset financiers and more.
As New pointed out, achieving mass electrification for transport requires the alignment of these interests and the careful unification of two enormous industrial and economic systems.
Get it right, and an intelligent integration will deliver huge system and carbon savings via energy flexibility and seamless interoperability of data and hardware. Get it wrong, and the meeting of energy and transport will be more like a tectonic clash, sending out reverberations that manifest in duplicated, incompatible systems, poor consumer experience, stunted uptake of EVs and, consequently, a slow pace of decarbonisation across both the transport and energy vectors.
The EV Energy Taskforce has been challenged to avoid a dystopian future by putting in place foundational frameworks for healthy EV markets with end-user interests at their heart.
In its first year of work, the group has brought together a proactive range of participants from all interested parties and focused on producing a set of recommendations around three priority areas:
1. Bringing smart charging to life;
2. Ensuring interoperability: hardware, data and transactional;
3. Delivering a coherent planning and governance infrastructure for EVs.
A report with suggestions to address these important areas for EV success is waiting in the wings until after the general election. But as New admitted to the Accelerate audience: “It’s one thing to come up with some proposals. Turning them into action is quite another.”
The next challenge for the EV Energy Taskforce, therefore, will be to amplify the progress it has so far made in aligning multiple stakeholder groups and gaining buy-in to its vision.
Discussions at Accelerate showed that the wider industry is willing but there are still big bridges that need to be built between key players such as auto manufacturers, infrastructure providers and energy suppliers in order to secure positive outcomes for all.
Currently, there is little shared understanding between these actors about the impact that isolated technology choices today will have on the development of EV value for tomorrow’s drivers, whether consumer or commercial. A key example raised by energy retailers at Accelerate19 was the absence of inverters in most EV models being manufactured today. This omission on the part of many OEMs could preclude their cars from bi-directional charging and so put a limit on their ability to be leveraged in tomorrow’s energy flexibility markets. It’s a restriction that has many suboptimal impacts, reducing the ability of suppliers to innovate in their business models, reducing the ability of energy networks to use EVs for demand-side capacity management, and blocking consumers and commercial fleet managers from accessing fuller flexibility market benefits.
It’s just one small example of the reason why it is so important to agree common standards and policies for EV technologies and markets as soon as possible. It will require co-operation and collaboration on a multi-sectoral level never seen before.
Energy retailers and the EV opportunity
A table of energy retailers at Accelerate19 – hosted by event partner Cognizant – agreed that EVs present a major opportunity to escape the profitability sinkhole embodied by the traditional domestic energy supply market.
All attendees had live tariffs and charging offers for EV owners and reported broadly positive consumer experience of the differential pricing models included.
However, the group also agreed that significant barriers stand in the way of accessing greater commercial value from EV products and services. First and foremost, these include scale, because despite significant uptake in the number of EVs on UK roads, their penetrations still stands at only around 2 per cent of the market.
Additionally, there were some major worries about the accessibility of bigger EV-related revenue opportunities, especially those relating to flexibility markets.
Participants agreed that significant hype around the potential of vehicle-to-grid (V2G) charging, for example, masks the fact that the appropriate charge point technology is currently prohibitively expensive for consumers (although some thought it is reaching a tipping point for affordability in the realm of commercial fleets). Some suppliers also observed that most EV models do not include the inverter technology that would make V2G charging easier and called on greater forethought from original equipment manufacturers (OEMs).
Another big issue for suppliers hoping to play strongly in EV-enabled energy flexibility markets were recent “regressive” regulatory steps, including those in Ofgem’s targeted charging review, which one debate participant said had cut their potential EV-related revenues “in half”.
Other big discussion topics as the group considered what steps might liberate and make more active a market for EV products and services in the UK included scope for greater collaboration with local authorities, automotive OEMs, and energy networks. There were also suggestions that the move towards open data principles for “state of charge” and local grid constraints could be helpful, although there was significant caution around the potential of this to undermine commercial interests.
The standout ask from all participants, however, in order to create the volume of engagement needed to make EV markets economically interesting, was that government should take action to properly incentivise uptake. A range of different options were tabled, from a strong carbon price to tax-free EVs alongside heavy taxation of petrol and diesel vehicles, but all agreed that a “bold move” from government could be the key to unlocking the significant commercial, consumer and environmental benefits from the electrification of transport.
What’s worrying Philip New?
Adoption of EVs is ramping up, infrastructure is spreading and new ownership models for EVs are coming to market. It’s all good news for the EV enthusiasts behind the government-commissioned Electric Vehicle Energy Taskforce, which has been tasked with ensuring maximum national benefit from the transition to electric transport.
But at Accelerate19, the taskforce’s chairman, Philip New, admitted he is concerned that continued EV rollout without strategic intervention could lead to unintended consequences.
“I worry that in the excitement and glamour of rolling out the hardware, we forget that there is an awful lot of thinking that needs to be done to ensure the underlying standards, ways of working and interactions between moving parts are in place,” he said.
“We are on the cusp of a fundamental change, not only to the infrastructure required for this wholly new transport technology, but also to energy markets as a whole – and EVs could be a catalyst for that energy system transformation.
“If we mess this up, not only will we get in the way of the transport transition, we could also get in the way of the transformation of the energy sector.”
MINI Electric facts and figures:
Range: 145 miles
Rapid charge time (50kW): 36mins for 0-80% charge
Home charging: 12hours for a 0-80% charge or
4 hours with a home wallbox
Cost: £24,400-£30,400 (consumer retail price range)
Challenges for fleet managers
One of the four roundtable debates at Accelerate19 was populated by commercial fleet managers from across sectors, including the water sector where an ambitious target to slash industry carbon emissions to net zero by 2030 has recently pushed the decarbonisation of commercial fleets up the agenda.
Despite this driver in the water sector, and a common will across the whole group to adopt low-carbon transport options, the conversation highlighted the persistence of key concerns around switching to EVs, including range anxiety, the lack of widespread charging infrastructure and, for some, vehicle cost.
Overlaid on these issues, which have much in common with consumer EV worries, were other logistical and HR niggles that companies were struggling to navigate. In addition, for those with large numbers of heavy commercial vehicles in their fleet, decarbonisation remains problematic. EVs were agreed to be simply unviable as a solution in this space, while biofuel and hydrogen options were seen to have significant limitations.
Key discussion points from the table included:
Driver experience: Most participants who had taken steps to switch fleet vehicles to electric options reported a superior driver experience compared with traditional models. Many also said that their fears over range and charging had turned out to be worse in theory than in reality.
That said, difficulty getting home at night was a concern for those with company cars clocking up more than 100 miles a day, and until battery life was extended, EVs would remain off the menu for high mileage users. This was not only because of concern over the lack of charging infrastructure, but the prospect of time spent unproductively charging vehicles. Representatives from the table sponsor MINI pointed out that the 350-mile battery was on its way, with parent company BMW among those bringing the technology to market.
Tempting tax breaks: Reducing company carbon footprint was a key driver for EV interest across the group. However, the financial benefits of switching to low-emission cars were also front of mind. From April 2020, benefits in kind (BIK), which determines the tax employees pay on company cars, will be zero for EVs, meaning major tax savings are up for grabs.
Affordability: Our fleet managers came from companies where employees got to choose their company cars based on cost bands. For those in the financial sector, leasing costs were not a barrier, but this was not universally the case. Our guest from a utility company pointed out that tough determinations mean they cannot be seen to be wasting public money and EV options in suitable price bands are limited.
It was acknowledged, however, that costs were falling in low-emission cars – the new MINI Electric will cost less than the petrol version. It was also pointed out that vehicle costs will be offset by fuel expenditure potentially by further savings for those travelling into low-emission zones where EVs could save as much as £25 per day.
Charging issues: The availability and convenience of public charging points inevitably came into the discussion, but in addition there were more logistical issues at stake around costs, reimbursement and home charging. Companies generally wanted the bulk of charging to happen either at home or through their own charging installations, to keep down costs down, although installing charging points itself could be costly, with one fleet manager quoting a figure of £30,000 for four charging points.
One guest from the financial sector said that employees were only allowed to opt for electric if they could charge at home. But this in turn created some knock-on issues. A utility representative, for example, said that field workers were allowed to take vans home overnight and were allowed to go straight to appointments in the morning. However, many of their domestic arrangements were unsuitable for home charging and there was the added the worry for call-out workers about the readiness of vehicles to get to customers if vehicles were mid-charge.