An increase in electric vehicle ownership in the UK is becoming inevitable. Simon Sjenitzer, director – energy & climate change business development at WYG, asks: can legislation help our infrastructure cope?
Britain is investing more than £1.2 billion in electric and driverless vehicle technology to create a market the government estimates could be worth £50 billion by 2035. There are now more than 126,000 battery-powered cars and 4,200 vans in the UK, up from almost zero a decade ago. Last year, the UK saw a 22% increase in sales of electric and hybrid cars (88,919 vehicles), and the number of plug-in cars and vans is predicted to reach 9 million by 2030.
This is driven by the government’s commitment to ban sales of all internal combustion engines by 2040, and make a sizable investment in EV technology. Car manufacturers are also pledging their commitment to this new era. Renault Group recently unveiled its plan to create eight all-electric models and 12 hybrids by 2022, and cut its diesel range in half over the same period. Jaguar, Range Rover, Volvo, Dyson and BMW have also pledged to invest in electric engine technology.
This transformation in attitudes could mean a sea change in how much electricity is used throughout the country on a daily basis. Currently, EVs are typically charged at home at low-speed charging points, usually 7kW in size. Most homes have a 60-100A supply. If EV users want to charge their cars faster in the future, they will need to invest in larger batteries, which, according to the National Grid, may overload the main fuse when a kettle, oven, shower or immersion heater is used at the same time as the EV charger.
A loss in fuel revenues could prompt a concerted shift towards higher taxation on electricity supply
When you consider the impact an increase in EVs may have on our automatic electricity habits, such as flicking on light switches or turning on the heating, it reveals how important it is that EV use is supported with the correct infrastructure. At present, there are just 13,900 publicly-available chargers throughout the UK – one charger to ten EVs. The government’s recently published Automated and Electric Vehicles Bill could require petrol stations across the country to install more charging points. Fuel companies are taking notice, as seen in October, when Shell opened its first EV charging points at petrol stations in London, Surrey and Derby. Drivers will be able to recharge their batteries to 80% of full capacity in half an hour at these points.
But what will an increase in EV ownership mean for the UK economy? The shift from petrol and diesel to EV could have huge fiscal implications. Earlier this year, a report by a UK think tank suggested that as much as £170 billion could be lost from government revenues between now and 2040 because of declines in fuel duty as electric vehicles become more popular. If EVs eventually take over from petrol and diesel vehicles, then the current model of a sales tax on petrol and diesel will cease to exist. How will the loss of those revenues be compensated for?
Road tolls and congestion charges have been suggested as an alternative to fuel duties, but should these measures not prove sufficient, a loss in fuel revenues could prompt a concerted shift towards higher taxation on electricity supply to fill the gap.
Electricity wholesale costs will probably remain relatively stable. But green “pass-through” charges are likely to double over the coming years to pay for necessary market intervention initiatives such as capacity auctions, support for low-carbon generation and infrastructure improvements as we move towards “smart” grids and decentralised generation.
That will mean revising the next phase of the RIIO price-control regulation to incentivise EV ownership further and make sure consumers continue to get value for money on their electricity. The car industry itself is developing ways to capitalise on new financial models for the electric vehicle market. Nissan is conducting trials on a system that gives EV owners the opportunity to gain incremental revenue by selling their stored power back to the grid. Smart incentives such as these should be encouraged. Legislation in this area would spur an increase in EV ownership and take pressure off the grid.
That will mean revising the next phase of the RIIO price-control regulation to incentivise EV ownership further
It strikes me that along with the progression towards EVs – and with driverless vehicles as the next step – we seem to be discarding our love of the motoring experience. This will leave “petrolheads” like me lamenting the good old times, as driving will become simply a method of getting from A to B, and common EV ownership will be the new order of the world.
If this is to be the future of the car industry, then the government faces not a technical challenge but a regulatory and policy-driven issue. The government investment in innovative technology will help improve our current energy infrastructure and transform it into a modern, sustainable and responsible system; but what is really needed is legislation that will help shape the market – not just to spark an initial uptake in EV technology, but to ensure its future.
First published in the December 2017 issue of New Power Report.