Utility Week

26 | 2ND - 8TH NOVEMBER 2018 | UTILITY WEEK Customers Analysis A n accelerating demand for electric vehicles (EVs), driven by the decar- bonisation of transport, represents an opportunity for energy companies of all sizes. Retailers are increasingly coming up with new strategies to tailor their tariffs to attract EV pioneers who have taken the plunge and bought an alternatively-fuelled vehicle. There's still a long way to go on the road to zero-carbon emissions, yet the number of EVs is fast heading towards 200,000. It may be early days in this shi in consumer behav- iour, but mass take-up is edging ever closer. The UK government has already said it will ban the sale of all petrol and diesel-fuelled vehicles by 2040. Meanwhile recent calls by MPs on the Business, Energy and Industrial Strategy (BEIS) committee have urged this be brought forward by eight years to 2032, in line with Scottish government targets. Figures from the Society of Motor Manu- facturers and Traders show that the number of registered EVs is increasing year-on-year. Demand for hybrid and plug-in cars has surged 88.7 per cent, and they now represent eight per cent of the market – its highest ever level, with a record one in 12 buyers going electric. The figures also reveal nearly 7,500 hybrid, plug-in hybrid and pure electric cars were registered during August – an 89 per cent increase on the same period last year. Filling station to charging point For energy retailers, stung by the controver- sial price cap, the electrification of transport offers a welcome potential revenue stream. Indeed, speaking at Utility Week Congress in Birmingham recently, Eon's Michael Lewis called for the proposed ban on petrol and diesel cars to be brought forward from 2040 to 2030. Referencing a new report from the Inter- governmental Panel on Climate Change (IPPC), which warned energy systems will require "far-reaching" changes to prevent increases in global temperatures leading to runaway climate change, he said: "If we're to deliver the carbon reductions we need, we need to electrify transport, we need to elec- trify heating and we need to bring demand customers into the system and value that flexibility. It's critically important that the government really starts to drive that ambi- tion so that we [the industry] can respond with our investment." Eon is one big six supplier that offers a domestic EV tariff. Eon Fix and Drive is a 100 per cent matched renewable electricity tariff set at a fixed rate over two years. The company says it differentiates itself from other suppliers by offering customers a fixed reward of £30 per year, paid to their electric- ity account – equivalent to 850 free miles. Lewis adds Eon's tariff was designed for customers with higher electricity bills in mind. "Drivers need to be able to charge their cars quickly and conveniently, and for many that means plugging in at home. Our new Fix and Drive tariff has been specifically designed with these customers in mind, who are likely have higher electricity bills, to pro- vide competitive pricing, a rebate and clean energy to supply their homes and power their vehicles." Yet it is not just the bigger players who are set to benefit from the opportunities ahead. In fact, according to one industry com- mentator, EV tariffs are one of the few areas where the larger suppliers do not have a significant advantage – where there is more of a level playing field for smaller mid-tier retailers. "[The EV market] is a pretty small mar- ket at the moment because, even with those increased sales figures, they still only account for a small fraction of vehicles on the road," says Oliver Rix, a partner at Bar- inga business and technology consultancy. "What that means is it's a market you can experiment in with less risk because it's small. That probably allows the smaller play- ers to do things that they don't have to worry too much about in terms of scale-up initially and hence there is more room for experimen- tation. Also, those mid-tier or smaller suppli- ers are always on the lookout for being able to differentiate, and again, this is an area they can differentiate in. "It also aligns with a number of them, at least in terms of the sustainability brand oen with links to say 100 per cent renew- able supply tariffs, and so that would sit alongside it from a branding point of view." Race to market Rix adds that the size of bigger companies means implementing systems updates to deal with new tariff structures can be a chal- lenge, but smaller and more nimble firms can achieve systems changes more swily, allowing them to get their products on the markets faster. Octopus Energy launched its Octopus Energy Go tariff, a "100 per cent green tariff " specifically for EV owners, in June this year. Octopus says this tariff allows car charg- ing at a tariff that is 70 per cent lower than a typical big six tariff. Fiona Howarth, CEO of Octopus Electric Vehicles, says having EV experts ready and willing to talk to interested customers, as well as hosting test-drive days, is key to attracting potential EV customers. "We found that, when we are doing our test-drive events, 84 per cent were more likely to transition to electric having come along to our event, spoken to our experts and having driven a car. The other 16 per cent were neu- tral – because actually they were quite keen when they first turned up and just wanted to be reassured that the cars were as good as they thought. No-one was less likely to buy having come to one of our events." Howarth adds there is also something of an online "EV community" among those who have bought the vehicles. Many will dis- Wheels and energy deals The popularity of electric vehicles is opening up new revenue streams for energy suppliers. Adam John takes a look at how the market is responding. "Drivers need to be able to charge their cars quickly and conveniently, and for many that means plugging in at home" MICHAEL LEWIS, EON

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