Steve Jennings - Partner, UK Leader of Industry for Energy, Utilities and Resources, PwC
Adrian Del Maestro - Director of Research, Strategy&
Graeme Cooper - Project Director, Electric Vehicles, National Grid
Welcome to the third episode of our Innovation in Energy podcast series.
My name is Steve Jennings, and I am the Lead Partner for Energy and Utilities in PwC, UK.
In this episode, we are going to discuss the outlook for and some of the challenges facing electric vehicle charging infrastructure in this country. Recently we produced a report looking at this topic called ‘Charging Ahead’, and you will find this report on our website.
To help us discuss this theme, I am joined today by Adrian Del Maestro, our Director of Research in PwC Strategy&, and Graeme Cooper, Project Director for electric vehicles at National Grid.
Adrian, perhaps you first of all, where are we currently vis-a-vis electric vehicles and charging in the UK.
Adrian Del Maestro
Clearly very exciting times. I think there is an element of hype in the market. So, if you look at the numbers just of electric vehicles, there is something like a 135,000 electric vehicles in the UK. So, these are battery electric vehicles and plugin electric vehicles, that’s less than 1% of the car fleet. If you look at Norway, for example, which is very much a leader in electric vehicles, they have got 40% of the car fleet, so we are still some way behind.
Having said that, demand for electric vehicles is growing significantly. So, if you look at the total EV stocks, the actual car fleet, its doubling year on year, and has been doing so for the last few years.
When you look at the number of registrations, 2017, there was something like 46,000 new registrations, that’s up 25% on the previous year. There is a regulatory push behind this as well. So, we all know about the announcements of the UK government to ban sale of diesel cars and petrol cars by 2040. Scotland is looking to bring that a little bit closer by 2032, and you look at all the major cities in the UK, there is a big discussion about air quality issues, and that’s part of the drive, the push towards electric vehicles.
In terms of the charging infrastructure, well there is roughly about 15,000 charge points across the UK. Most of them are slow charges, only less than 20% are fast charges, which typically means you can get a charge to up to about 80% within about half an hour.
They are spread across the country, is about 20% in London, 15% in Scotland, and the rest spread throughout the whole of the country.
I think the big issue there is, it’s not growing as fast as the vehicle fleet. So, if the EV stocks growing at, kind of, doubling every year, charging point numbers are growing at about 50% year on year. So, they are lagging behind. So, clearly a need to grow that capacity looking ahead.
We all hear about range anxiety being one of the concerns and one of the constraints at people adopting electric vehicles, but do we have any data or research that suggest where people are likely to charge their cars?
Adrian Del Maestro
Yeah, so we’ve looked at this in the recent report that you quoted, ‘Charging Ahead’. Most charging will probably be done at home. The study that we did, over 80% of vehicle drivers have access to off-street parking. So, clearly you are going to have a quite a few people charging at home.
The other data point that was interesting that came out in our report is the largest chunk of battery electric vehicle drivers typically charged between 5 and 8 in the evening. So, you can imagine that there may be, if there is a big uptake of electric vehicles, you may have implications for the grid. I know Graeme is going to speak about this later on. So, that’s clearly one big theme to go ahead.
The other thing is, you need to have access to public infrastructure charging, because even though most people would be charging at home, there is this element of range anxiety as well, and cities are going to be key to driving the EV adoption uptake. You look at all of the other countries where there has been rapid uptake of electric vehicles, is being driven by the cities. So, the cities need to make sure they have access to public charging.
There is a question about the speed of that charging, and we are probably going to talk about that later as well, so that would be a key thing; and I think also having access to charging in the workplace is another key element in terms of spreading that demand there.
Adrian, as you said, many users will charge their vehicles at home. Clearly there will be a need for public charging, we will come back to that, but you also touched on the potential impact on the grid.
Graeme if I may turn to you at this point, given that we will see growing demand for electric vehicles and home charging, will there be implications for peak load on the grid?
I think there are 2 things to consider. You’ve got the energy element, and you’ve got the networks element. So, in our future energy scenarios, if everybody came home at 5 o’clock on a wet winters evening, and everybody plugged in at that time, theoretically if you model forward, you could need 18 gigawatts of new generation. So, this is where you get your daily mail headline, that we going to need 5 new Hinkleys, right.
But the one thing we realised in our network is, we rely on diversity. We don’t all do the same thing, all at the same time. But to an extent, there is an element of risk that people do generally follow patterns. We all finish work at a similar time, we arrive home at the same time.
One of the things that will be important as we get a greater penetration, is to have an element of smart charging, whereby you charge not at system peak. So, in our modelling for future energy scenarios, that 18 gigawatts of new generation that we could need in 2050, actually reduces down to about 5 gigawatts if it’s smart.
It’s quite important that we consider the end game here, the future, whilst we are making the small baby steps that we do now, but also you’ve got the element of the wires space. Now, this is more complex and people confuse the energy element and the wires element.
I think there may also be a really important role to play for DNOs in smart charging. In that, actually do you want to dig up an entire street to support enhanced car charging, or will a small interrupt, when the set network is loaded, just to interrupt car charging for half an hour here or an hour there, could actually avoid infrastructure cost. But the challenge is, we don’t actually have to make an active decision, as the networks business is, is that the right thing to do, somehow giving you a lesser service.
It’s important that smart is considered to make sure the home charging piece works really well, but I also think that the public charging piece, had a really interesting statement yesterday that I thought really summed it up nicely. ‘I don’t want to charge whilst I wait. What I want to be doing is, charging whilst I am doing something else’. So, it just becomes a nice neat function, although that I am doing something, and by the time I finish what I am doing, my car is charged. But then that brings you onto the, you know, who incentivised that and how does that work?
It’s a challenge, because the faster the charger, the more disproportionate the cost of that fast charging, and that needs to be borne somewhere.
But I have tried to get my mind around Graeme is, what’s the right balance here between home charging, which as you say, will inevitably be slower, because of the capacity of the connection, and faster charging, which is more likely to be available through public charging, wherever those public charging sights might be, whether they are in, petrol, forecourts, and motorway service station.
You got any feel for what that balance is likely to be in the future?
I guess it’s a reasonably intuitive process, because you can’t just assume the same models we use for refuelling with liquid fuel, follows the same model for electric cars. Being a plugin hybrid owner, but also an electric car owner, it ends up feeling a little bit more like mobile phone charging than refuelling a car. So, I generally assume that having car charging, I would just pull in at home every night and just plug the car in, and in the morning would be done.
The challenge you find with home charging, is the bigger the battery of the car, you realise that home charging may not actually be fast enough if you have consecutive days where you are using a lot of power. So, the answer to fixing range anxiety just by bigger batteries, the unintended consequence is, you will have 2 ton cars, you loose the efficiency, but you won’t have enough rate of charge at home to refuel fully.
This then leads you to the, ‘well, if I am doing that sort of distance, charging up on my route becomes really important’. If you are mapping your journey, you don’t want to have to budget for an extra, you know, an hour in your journey to make sure that you can make it there and back.
I think it will end up being a really interesting mix. As a practical example for my week so far, charged up at home over Sunday night into Monday I was full. I drove to Warwick back on Monday, but on the way back, my car told me that I may not quite make it at the consumption level I was running at. So, I had to make a decision, ‘did I choose to charge at one of my intermediate meetings, or did I grab a fast charge on my way, again the car helps me with that’. I actually need to stop for a cup of coffee and to answer a couple of emails. So, I used the time to fast charge, so that worked for me in that instance. But it does mean that there is not one golden answer to how we fix this.
But coming back to your comment about range anxiety, if the first reason for not buying electric car is cost, as is usually given; and the second reason is availability of charging, and it’s not the just the availability, it’s the right sizing of that. If we end up with that fast charging freely available, then you build confidence, the market will grow; and actually as the market grows, there will be that learning and developing as to what’s the right mix of home, to fast, to destination.
Adrian Del Maestro
I mean it’s a really interesting point there. That balance is going to be the kind of formula for success, because a lot of the discussion now is around the fact that it’s going to take 30 minutes to charge your car, so allow the consumer to do something on the forecourt, go and have something to eat.
We were talking about this recently, most of the biggest reason why people stop at motorway station fill up, is actually to go to the lavatory.
Absolutely, at 97%.
Adrian Del Maestro
Exactly, but if you build that model as a comprehensive model, there is going to be a lot of people, who simply just want to charge their car quickly like they do now with diesel and petrol cars, you fill up 5 minutes and off you go. So, you need to have that model that flexes between these different types and needs of consumers.
Adrian Del Maestro
I don’t think we’ve cracked it yet. It seems to be lot of models going out there. There is no clear comprehensive view about how to take it forward.
Yeah absolutely, but I think this is really where there is going to be a really interesting dark card. So, pick your typical supermarket, people generally do a shop once a week. Well, if you don’t have charging at home, then you are going to want to charge for the week at that one location. So, you are going to want a really fast charge, but that has a cost associated with it. But at the same time, the supermarket quite likes you to hang around in the store for a period of time, and don’t know what that is, for your optimum spend. So, you could almost see in your typical supermarket, your premium paid for service, which is fill up quickly that does you for the week; you, kind of, run-of-the-mill, sort of, solution whereby somebody comes in, they will be shopping for 45 minutes to an hour, they will want a reasonable charge. Then there is almost that value offering, really which is, ‘I don’t need to charge for my entire week, but it’s kind of handy to trickle charge, whilst I am here’.
I think there will be this sort of art in the way we look at dwell time at forecourts, and what will you buy at the shop when you pay for your fuel. I think they will develop this art around what is the combination of fast, medium, and slow for each of these sorts of locations.
I am delighted to hear that you are a driver of electric vehicle, but a number of listeners of the podcast may well not be, but will be thinking about electric vehicle, and certainly wouldn’t want the availability of charging to be a constraint to the adoption.
I think, my question from what I’ve heard really is, it is critical that we have the right combination of fast and slow charging, home and public charging, and we don’t want the availability of charging to be that constraint to people adopting electric vehicles.
What do you think the country, the government, the industries can do to accelerate the rollout of electric vehicle charging, and is there a need for some form of UK wide roadmap that identifies what needs to be done when, to what specification?
Well I guess, the challenge presented to us as a business is ‘well National Grid, you don’t need to do anything, the market will fix this, you know, demand will generate the need, the commercial market would look to fulfil that need, and will end up with this perfect solution’.
I guess, the challenge that you’ve got is, if you follow that in its purest sense, you could see high population centres get some fast charging early on, and then if you are not in those population centres, you are in some kind of third world in EV charging, but also I think to an extent there is an element whereby a little bit of structure becomes your good starter for 10.
Going back to the reasons given for not buying any of these. So, there is the initial purchase price, but the whole life cost gets over that argument, and as battery prices fall, will get there. Then the next piece is this availability and right sizing of charges. Well, if you want wholesale uptake and that nice groundswell moving in a direction, the strategy that we came up with is, if you had 50 strategic locations across England and Wales, whereby National Grid provided the infrastructure, the wires, but not the charging solution, then actually 96% of the population would know with confidence they could drive in any direction no more than 50 driven miles, and be able to charge their car in 5 to 12 minutes.
Now that’s not the complete answer, that is your starter for 10, but if that’s the biggest reason why you don’t buy an EV, and you can overcome that, then the market should take a step change forward; and so that start for 10 just kick starts the market. It gets your base level of charging infrastructure enabled. The commercial market will compete to deliver those charging solutions, but then as you end up with this virtuous circle, because actually more cars on the market, more people needing to charge, more demand for further charging spaces, the commercial models will then beautifully fill in and dovetail into that as a solution. So, if you want to make progress at a nice pace; that little bit of early structure should enable us to actually take that step change towards an EV future.
I think, Adrian has said so, this was a theme that was explored in our ‘Charging Ahead’ report, which we published. Is there anything else that you would add to what Graeme has said in terms of what could potentially be in that countrywide roadmap?
Adrian Del Maestro
Graeme has done a fantastically eloquent job of articulating the value preposition there. I would just say simply, I think we do need a road map. Certainly in our conversations with other clients in the sector, there is a lot of innovation in the sector, clearly it’s the strength there. There is an argument there amongst some of the market participants is, you let the innovation come to fruit, and that would deliver what you require; and I can think of many examples where you see, any new interesting business models emerging, there is an example of InstaVolt that’s come up, where they basically offer to put a EV charging point free of charge on to forecourt. They look after the maintenance, they give an income to the holder of that forecourt and they are basically taking all the risk upfront in terms of spending their capital expenditure, that’s a great model.
My concern would be, if you look at, for example, the way in, and Graeme alluded to this, you know, the way broadband was approached in this country. Lots of the cities had access to broadband, but once you went into the rural area, it was slightly less efficient there; and I think if EV adoption is to be successful in this country, it needs to be comprehensive. The cities are clearly going to be the catalyst, the driver of that change, but you need to have it right across the whole country.
I agree, right.
Adrian thank you, Graeme thank you very much for joining us.
Clearly there are challenges to rolling out EV charging across the UK, and these will need to be addressed if the country is to take a leadership role in new vehicle technology developments and the adoption of electric vehicles.
What is pioneering the transition to a low carbon economy? As I mentioned earlier, many of these challenges are explored further in our ‘Charging Ahead’ report.
I just would like to thank everybody for listening to the podcast. I hope you enjoyed it, and please look out for our next series, where we will continue to be looking at innovation in energy.
Thank you for listening.