Chief executive’s view: the electric vehicle shift

Demand for diesel cars is plummeting as demand for electric vehicles is on a rapid upwards trajectory. Ovo Energy chief executive Stephen Fitzpatrick looks at the implications for the energy system.

In 1956 the UK passed the Clean Air Act in response to deadly levels of urban air pollution. It was one of the world’s first pieces of legislation specifically designed to address the effects of modern society on the environment. Gone are the days of “pea soupers” but the pollution remains, it is just harder to see. In 2017, we associate urban smog with the rapidly industrialising cities of east Asia, China in particular. And yet in January this year London’s air pollution index surpassed that of Beijing.

With demand for diesel cars plummeting and stricter emissions limits looming, car manufacturers are racing to develop new electric vehicles. One car company alone, Volkswagen, has announced a €34 billion investment programme to accelerate its development in this field. With almost 80 new models expected to be available for sale by 2020, we are on the cusp of a major shift to electric vehicles. Analysts estimate that there will be one million electric vehicles on UK roads by 2022. There is debate about the speed of this transition, but few doubt it is happening, and that the impact on our energy system will be profound. The challenges that will arise from this new technology need to be addressed today.

Firstly, one million electric vehicles will represent a large-scale power reserve, a distributed and growing energy storage asset. There has been discussion about the merits of a decentralised energy system in recent years, but current policy and economic frameworks do not allow or incentivise owners of electric vehicles to participate in the market for flexibility services. Instead, we are designing a system that encourages the additional cost of large-scale storage and additional investment in grid infrastructure.  We would like to see a system that incentivises transmission and distribution network operators to be pursuing policies that take advantage of technology to lower costs to consumers, including portfolios of distributed flexible energy devices.

Secondly, we should ensure that electric vehicles do not become an additional strain on the energy network as opposed to a valuable storage resource. This will require the adoption of smart technology into charging infrastructure. The government is committed to passing new smart charging regulations, but these are unlikely to come into effect until 2019. In the meantime, current policy will continue to subsidise dumb charge points.

To illustrate the difference smart chargers can have, estimates have put the uppermost load on the grid from one million electric vehicles as 7GW. Smart chargers designed to shift all non-urgent charging to off peak periods can enable an even spread of charging, and with them in the system we have calculated a realistic estimate of 600MW load at any one time. Adoption of vehicle-to-grid technology can even swing this into reverse, and allow cars to act as a reserve power source for the home and grid. The government should mandate immediately that all home charging points are smart enabled. This simple shift in policy will dramatically reduce the need to upgrade our existing energy infrastructure, saving UK energy consumers billions of pounds over the coming decades.

Finally, we need to incentivise and require local government, especially in urban areas, to invest in on-street and public charging. Cities stand to gain the most from the shift away from polluting petrol and diesel engines but without an accessible public charging network, urban motorists will never be able to fully embrace electric vehicles. Our government has committed at least £50 billion to the HS2 project, which will not have any impact on transportation for at least a decade. For a fraction of the cost, government could fund the widescale roll out of the world’s largest electric vehicle charging network, catapulting the UK to the forefront of this new technology.

Throughout history there have been major shifts in transportation; from horsepower to the combustion engine, from sail power to steam, and now from petrol and diesel to electric vehicles. Every revolution has shaped our economy and society, and fundamentally transformed our energy system. Britain has been at the forefront of all previous major transport and environmental developments, let us be at the forefront of this one too.