Electric vehicles will reshape the future energy system

The government has pledged to ban the sale of all petrol and diesel cars in the UK by 2040. The major alteration of the UK energy system which could occur as a result will have a big effect on energy companies. David Blackman reports.

Our cars could look very different in the future, when electric motors have replaced the internal combustion engine. There will be no need for a bonnet for starters, because electric motors are a lot smaller and work best closer to the wheels. But it’s the potentially radical reshaping of the UK’s energy system which is looming – as a result of the government’s announcement in its air pollution strategy last week that the sale of petrol and diesel cars and vans will be banned from 2040 – that will be causing energy bosses sleepless nights.

Critics seized on National Grid’s forecast that the UK could need 18GW of extra generating capacity to cope with peak demand periods if motorists plug in to recharge at the same time. The announcement has prompted a barrage of concern that the increased demand can only be met by boosting the UK’s baseload capacity of gas-fired and nuclear power stations.

Others downplayed the focus on this forecast as alarmist, pointing out that it was based on a worst-case scenario. “The way the numbers have been thrust into the debate isn’t particularly helpful,” says Dr Jonathan Marshall, energy analyst at the Energy and Climate Intelligence Unit. “The idea that it’s going to take energy industry by surprise is not serious. It’s a bit like 20 years ago saying you were going to ban VHS in 2017,” he says, referring to the once ubiquitous video system that is now so redundant that charity shops won’t even accept the cassettes.

What should be keeping the industry awake at night is the possibility that the switchover from petrol and diesel vehicles could happen very rapidly, warns Simon Skillings, a senior associate at energy thinktank E3G. “It’s not beyond the realms of possibility that electric vehicles might get quite popular quite quickly,” he says. “If they did take off very quickly, our systems couldn’t respond quickly enough.”

Already the cost of lithium ion batteries has fallen by 50 per cent, as the government’s paper pointed out last week. And the new breed of batteries now being fitted into electric vehicles have a range of 250 miles as opposed to the 70 or 80 usually achieved today. Once these new batteries become the norm, the range anxiety that puts many customers off from purchasing electric vehicle is likely to diminish. At this point, many will feel more comfortable about switching from petrol cars.

“DNOs are worried about having particular areas where high concentrations of electric vehicle could overload a local substation”

– Simon Skillings, senior associate, E3G

Matthew Trevaskis, head of electric vehicles for the Renewable Energy Association, has a background working in the automobile industry. He points out that the product cycle for new vehicle from research to launch is generally seven years, which means that soon the automotive industry will be planning for petrol-free vehicles. At this point, the pace of change will quicken.

Alan Whitehead, Labour’s energy spokesman, says: “If we are serious about the 2040 target, you will be sending out signals that the market for petrol and diesel is no longer tenable for the next cycle of vehicle life so you will have to change your fleet.”

If the switchover to electric vehicles does happen as rapidly as some predict, says Skillings, two options present themselves. One is that the UK will have a security of supply problem. The other is that there would have to be restrictions on the availability of electric vehicles, which wouldn’t send a great signal to consumers about the government’s commitment to a low-carbon economy.

At a more micro but equally pressing level, Skillings says the worry for network operators is the inevitably haphazard way that uptake of electric vehicle could happen. “DNOs are worried about having particular areas where high concentrations of electric vehicle could overload a local substation and how to deal with that,” he adds. “If everyone in a housing estate is going to charge their vehicles at the same time you might have to resize the amount of power going into the estate, but it may be cheaper to use a smart device to control when energy use happens, and avoid a huge amount of money upgrading the network.”

Skillings argues that it is important to prepare now for the switchover to an electric fleet. Without the supporting infrastructure, he says, motorists won’t be prepared to swap their polluting petrol engine vehicles for electric ones if they are scared that it will run out of juice on a long journey. Oliver Rix, a partner in consultancy Baringa’s energy advisory practice agrees, saying tThe issue for the government is whether to introduce infrastructure before a purely commercial case exists.

“If you don’t make the network as flexible as possible you will have to build a lot more generating capacity”

– Dr Jonathan Marshall, energy analyst, ECIU

However, there are always risks in making early bets. The charging points introduced by Gordon Brown’s government in the late noughties, many of which languished largely unused in the intervening years, are a reminder of how easy it is to get ahead of the consumer. Another risk is becoming wedded to a particular technological solution, which could subsequently be superseded – as the government has found with its smart meter programme.

The key, though, is not to carpet the country with new power stations and windfarms, argues Marshall, but to boost the flexibility of the energy network, which is what the government had been talking about just a couple of days before the launch of its air pollution strategy. “If you don’t make the network as flexible as possible you will have to build a lot more generating capacity,” he says.

The good news about the smart systems paper is that it shows policy-makers largely agree about how the energy system of the future looks – with heavy penetration of electric vehicles, flexible local energy systems, demand responsive storage and much greater renewables.

“There is a lot of consensus around what the world will look like. The interesting issue is how we get there,” says Skilling, who believes the solutions outlined in the paper are incremental by nature, not the fundamental rethink of regulatory structures which will be needed to meet the scale of the electric vehicle revolution.

“The smart system paper is a helpful first step in recognising the needs around managing flexibility in the system but steps beyond are needed,” says Rix.

Perhaps most crucially, this includes the mix of energy being piped into the system, he adds. “The longer-term strategy relies on a vision of decarbonising the power sector that is not there yet. Everybody is hoping there will be a clear steer from the emissions reduction plan when it is published.”