Driven to Disruption – Electric Vehicles accelerating need for energy market change

From being at the margins only a few years ago, the decarbonisation of transport is moving centre stage for the energy industry. With transport emissions now accounting for more UK greenhouse gas emissions that the power sector, the reason is clear to see. Our Driven to Disruption paper explains and evaluates the electricity supplier offerings emerging for electric vehicles (EVs), driven largely by consumer demand, and how policy and regulatory frameworks need to adapt to accommodate them.

Electric vehicles (EVs) account for just over 2% of vehicles now on the road but are increasing at a rate of around 4,500 new registrations per month in 2018 according to the Society of Motor Manufacturers and Traders. Rapid growth looks set to continue, with our central estimate of 10mn EVs on the road by 2035.

Several electricity suppliers are already providing products aimed at capturing the business of EV drivers. These opportunities are on a continuum beginning with electricity-only products aimed at EVs, through to additional services and products linked to EVs (such as in-home charge points and access to public charge points) and finally integrated propositions that encompass a comprehensive package, of which EVs are just a single element. Each of these offerings has its own opportunities and challenges.

There is an increasing evidence base that to integrate the expected growth in EV numbers into the electricity networks at least cost there is a need to define what ‘smart charging’ entails. This will soon be within the remit of the government to mandate, following the passage of the Automated and Electric Vehicles Bill. The emergence of vehicle to grid (V2G) technologies, currently being trialled by a number of energy suppliers in conjunction with EV manufacturers, is another area where there is a pressing need to establish principles, guidance and rules for how households access these services. This should include costs associated with any infrastructure requirements (e.g. additional metering or communications), customer service and complaint handling.

In particular the regulatory framework around which the domestic consumer can finance packages and readily contract with a single party for all possible services requires a root and branch review. This needs to extend to the supplier-hub framework and consumer-facing regulation. However, before we get into the detailed of industry rule changes, there needs to be a more holistic review. We would hope that the government’s transport decarbonisation policy, to be firmed up in the Road to Zero Strategy gives some pointers. At the very least the government’s EV energy taskforce, due to launch shortly, should review all electricity market rules and make recommendations that allow the retail models discussed in this paper to be realised.

The release of the Insight Paper coincides with the launch of our Energy Retail & Electric Vehicles service. This quarterly service tracks the opportunities, threats, routes to market and competitive actiivity in the markets for supplying energy and charging services to EVs. For more informaiton contact Jacob Briggs at j.briggs@cornwall-insight.com or 01603 604423.

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