Utility Week

Special report: EVs ELECTRIC VEHICLES SPECIAL REPORT 10 | 25TH -31ST MAY 2018 | UTILITY WEEK GLOBAL VIEW EVs will account for more than 30 per cent of new cars sold in key automotive markets by 2040 – up from 1 per cent of new car sales in 2016 – according to a November 2017 study by IHS Markit. A key tipping point will be battery costs, which are expected to decline to a price point in the 2030s that will make EVs cost competitive with internal combustion engine vehicles. The International Energy Association's Global EV Outlook for 2017 stated that new registrations of electric cars hit a new record in 2016, with more than 750,000 sales worldwide. E lectricity networks have already been preparing for the EV revolution by running innovation projects financed through RIIO's Network Innovation Allowance and Network Innovation Competition, which allow network operators to run the projects essential to not only understand the operational lessons neces- sary to deliver EVs, but also the opportunities they will create in the future. We are starting to see the benefits of vehicle-2-grid (V2G) services, and the role that can play in terms of providing flexibility services to networks. Through other NIA projects, distribution network operators (DNOs) are also working on active response mechanisms that move spare capacity to where there is current demand for electricity from EVs. This could increase network capacity, saving Britain up to £270 mil- lion by 2030 by moving spare capacity towards plug-in electric vehicle charging. Combined with operational experience to date, these projects have highlighted to Electricity Network Association (ENA) members the importance of increased visibility and mandated notification of where charging points are on the network, the type of charging points (slow or fast), the importance of access to smart meter data and the need for smart charging infrastructure. The government's decision to promote smart charging over unmanaged charge points and the speed of uptake of these is critical. Without this, there could be a prolifera- tion of "dumb" charging points taking capacity on the electricity networks with no opportunity to manage the associated load, and hence leading to large reinforce- ment requirements for networks. Perhaps the biggest shi that this innovation is driv- ing is embedding the principle that simply building new network infrastructure is not the best way to deliver the EV revolution. The transformation to distribution system operators (DSOs) will be key to allowing operators to use infrastructure more efficiently to optimise network capacity, as well as procure flexibility services from local markets. Smart technology and flexibility services, including V2G, will be key to helping them balance sup- ply and demand locally. Network operators have already pledged to rapidly increase the use of these services dur- ing this price control period, and all of Britain's DNOs are now well under way in developing and delivering their own DSO transition strategies. However, long-term institutional changes are important too, and this is where ENA's Open Networks Project is already playing a leading role in laying the foundations for Britain's smart grid, by redesigning and standardising the institutional arrangements for electricity distribution. If the government does decide to bring forward a more ambitious target of 2030 instead of 2040 for the phase-out new petrol and diesel cars, then the ENA's members are ready to deliver. Comment: David Smith, chief executive, ENA Putting EVs at the heart of a smarter, cleaner energy system EV stock (millions) 2.5 2.0 1.5 1.0 0.5 0.0 Evolution of the global electric car stock, 2010-2016 Others Sweden Germany France UK Netherlands Norway Japan USA China Battery EV Battery EV+ Plug-in hybrid EV Note: The electric car stock shown is primarily estimated on the basis of cumulative sales since 2005. When available, stock numbers from official national statistics have been used, providing good consistency with sales evolutions. Source: IEA 2010 2011 2012 2013 2014 2015 2016 OPPORTUNITIES FOR ENERGY SUPPLIERS EV offer a fresh start for suppliers Although a report last year by the Renewable Energy Associa- tion (REA) warned 40 per cent of car owners will not have home charging, that still leaves a lucra- tive market. But it's not just EV tariffs that offer a new-look rev- enue opportunity for suppliers. EV growth is bringing with it a surging market for associated hardware, such as home batter- ies and (smart) charging points. Then too, there's the opportunity to link up with car manufactur- ers to mutually benefit from the launch of new EV models with integrated energy deals. While suppliers seem to have stepped back from this kind of partnership aer an initial flurry of energy company-car maker tie-ups, the REA's head of EVs, Matthew Trevaskis, predicts market developments may soon see partnership announcements pick up again. "I think what we may well see now is the more eager utili- ties – and I think new utilities are proving this more than the established ones – are innovat- ing more quickly, not just in EVs, but in more responsive tariffs that more engaged consumers will take notice of." In October, Nissan announced it was joining forces with Ovo Energy to offer home batteries to Leaf drivers and a vehicle-to-grid service. And in February, Good Energy revealed it was working with Honda, Upside Energy and Salford University to test how EV batteries and other energy stor- age will impact home efficiency. Further fleshing out the size of the prize from integrated EV energy services, a report into EV uptake published by Aurora Energy Research in January pre- dicted "new business opportuni- ties" for utilities with potential revenues of more than £1.5 bil- lion per year by 2035. Meanwhile, growth in EV tar- iffs and technology bundles will also play a role in unlocking the potential of smart charging as a means to overcoming the chal- lenges of EV growth for DNOs. At present, only a handful of suppliers offer EV tariffs, but with millions of vehicles predicted on the road in the next decade, it won't be long before they become a standard part of every suppli- er's product portfolio. This is an extract form a longer report on suppliers' positioning in the EV market, which is avail- able exclusively to Utility Week members. For more information visit: utilityweek.co.uk/company- insights-electric-vehicle-tariffs/ Jamie Hailstone, freelance journalist

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