The Government’s recent confirmation that the long-overdue energy white paper is to be published “in a matter of weeks” is welcome news. But the devil will be in the detail.
The paper will undoubtedly call for more electric vehicles (EVs) on UK roads and alternative fuels to meet new vehicle targets. This is positive, but, as we all know, increased electricity demand stemming from the adoption of EVs is a huge challenge for the UK’s energy networks that the Government must address. Thankfully, the solutions are at our finger tips, but we need collaboration across the industry to make it happen.
Despite increased customer demand for EVs the electricity sector remains stubbornly in a “wait and see” pattern about how to respond and refuses to make decisions about how it will accommodate the transition to mass adoption. The Government-backed Electric Vehicle Energy Taskforce’s recent proposals for transport electrification are welcome, but the UK’s energy regulation framework is currently far too prohibitive to develop a network robust enough to cope with transport transformation. This is likely to be exacerbated next year under the RIIO2 regime.
Indeed, the energy sector as a whole needs to think very differently if we are going to take full advantage of new vehicle technology.
First, UK regulation needs to change. The current model does not allow network owners to invest in infrastructure innovations ahead of need, creating lags in how markets operate and how consumers make purchasing decisions. This raises the question: if firms aren’t incentivised to implement new ideas and fail along the way, how are they to deploy the innovative new solutions the network needs to accommodate EVs? Obliging network operators to wait until demand brought about by a spike in EV charging forces them to act will create needless delays and impediments in critical network developments.
Regulation, now more than ever, needs to be more flexible, agile and adaptable, and allow for investment ahead of need. To do this the White Paper must set out how the Government intends to develop stronger partnerships among all key players, including Ofgem, the Department for Business, Energy and Industrial Strategy, the investment community, power generation developers and network operators.
Second, the White Paper must acknowledge the value of community energy schemes – such as the Cheshire Energy Hub in Ellesmere Port – to bring together large-scale energy users to solve challenges at a local level. Energy generators based in the community and closer to electricity consumers will be able to solve hyper-local problems by leveraging local infrastructure. They will be funded through market mechanisms to draw investment into local areas where EV take-up is already developing naturally.
Third, we need new pricing models for EV charging that focus on putting customers in control of their energy usage. The Electric Vehicle Energy Taskforce has already identified that providing financial incentives to drivers to ensure that the potential energy storage capacity of EVs is used to reduce peak demand. But we need to go further.
Grid problems can be solved dynamically by using smart meters to charge cars based on demand on a first come, first served basis, and EV’s should be programmed by their users to charge themselves based on its precise needs and the journeys it knows it has to complete within given timeframes. The Taskforce is right to prioritise the benefits of smart charging to ensure that consumers are confident and well-informed, but the network needs to be ready for the meters themselves.
It’s clear, then, that what is needed is not simply goal-setting and Government-led recommendations for how to cope with the EV revolution. On the contrary, much greater impetus and co-ordination on the part of Government, regulators and investors, and a wholesale reappraisal of our approach to energy, is required. This starts with regulation. It is entirely within the Government’s power to develop a more flexible, innovation-friendly framework that will hasten the implementation of EV infrastructure and ensure tech solutions are more sustainable. The White Paper would be a crucial first step in this process. We also need to concentrate on the progress towards a more decentralised system, with strategic oversight from Government, based upon local energy networks.
Finally, consumer-centric pricing and incentives will ensure that the network can adapt to increased electricity demand build user confidence and uptake.
Ultimately, the White Paper should not ignore the central role of consumers in the transition. They should be empowered to become “prosumers” making active decisions about charging using real-time price signals. Empowering people to choose to reduce their own energy bills, by, for example, encouraging them to charge at certain times of day when the grid can cope, will not only support decarbonisation, but enhance security of supply, and promote affordability.
It is, after all, customer needs that drive innovation, markets and demand. They will move on without us, and we shouldn’t forget that.