Electricity distribution network operators (DNOs) are preparing their networks to accommodate a big step up in electric vehicles and heat pumps during the upcoming five-year price review period (dubbed ED2). The numbers have been highlighted in their draft business plans.
WPD, whose networks span the midlands and the southwest, says it will be ready for ready for up to 1.5 million electric vehicles up to 600,000 heat pumps by 2028. UK Power Networks, in London, east and southeast England, is planning for 2.7 million EVs and 700,000 heat pumps in its 8.2 million properties.
Scottish and Southern Electricity Networks (SSEN) Distribution expects to add connections for 1.3 million electric vehicles to its network between 2023 and 2028, and allow for the installation of 800,000 heat pumps. It serves 3.7 million properties in central southern England and the north of Scotland. The distribution business of Scottish Power Energy Networks, which serves 3.5 million homes and businesses, and sees just 10,000 EVs now, is planning for 670,000 electric vehicles and 370,000 heat pumps (and expects up to 1.5 million EVs and 900,000 heat pumps by the end of the decade).
Electricity Northwest expects 760,000 EVs by 2030 (in its ‘central outlook’) and 160,000 heat pumps. Northern Powergrid expects 760,000 EVs by 2030 and 160,000 heat pumps, in its central outlook.
This is a lot and accommodating it requires agreement from Ofgem to allow for the necessary spend in DNOs’ business plans.
But it’s far from the maximum that the DNOs have in their scenarios. Northern Powergrid alone, for example, has up to 940,000 EVs in its more ambitious outlook and 300,000 heat pumps.
And, crucially, it’s nowhere near the trajectory that the Climate Change Committee wants to see us on. By 2030, two years into ED3, the CCC’s model would like to see 5.5 million heat pumps in place and more being installed at a rate of a million a year. Two years later, by 2032, it wants 55% of vehicles to be EVs – 23.2 million.
That means Ofgem has to act. It has to accept the DNOs current plans to accommodate their current numbers of EVs and heat pumps. But it has to do more, and do it in the face of huge uncertainties that entail risk for customers. New Power has argued before that the EV rollout will be disruptive to the forecourt business model in a way that could prompt step-change. The heat sector is equally likely to see disruptive change to expectations. It is not clear how resistant consumers really are to heat pumps, but for many a drop-in replacement for a gas boiler would mean that question never need arise: options like the electric ‘boiler’ that attracted investment from the Clean Growth Fund this month might see large numbers of customers switch from gas to electric.
That means Ofgem has to accept at minimum DNOs plans to support EVs and Heat pumps – which, after all, should be supported by customers, as the regulator has required networks to engage with their stakeholders before submitting their business plans. But if it is to respond to the broader need, the regulator also has to go further. It has to encourage DNOs to prepare for faster rollout, with uncertainty mechanisms that allow for fast and responsive upgrades where DNOs see hotspots for EVs and heat pumps. The regulator also has to be prepared to underwrite more research into consumers’ real-life use of their vehicles and their use of heat. It has to encourage DNOs to work with their gas counterparts and user groups for heat and power to understand how they see demand changing. It has to incentivise DNOs to work with other parties, like local authorities, to improve their ability to predict where and when hotspots are likely to arise. And – because the cheapest and fastest way of accommodating the expanded electricity demand is via a smart and flexible system – it has to help facilitate local markets and no-build options.
This complex, whole-system support package will need responsive governance to go with it.
BEIS and Ofgem have begun consultations on this but change is not likely to be effected before the rush to decarbonise heat and transport is on us in ED2. The DNOs have to be ready to accommodate the change – Ofgem has to be equally fast on its feet and ready to be flexible, if it is not to stand in the way.