On 9 July 2018, the Government published its long awaited Road to Zero Strategy (“Strategy”), setting out plans to increase clean road transport infrastructure across the country, reduce vehicle emissions, and drive the commitment to zero emission vehicles. The Strategy builds on the Government’s previous commitments to end the sale of petrol and diesel cars by 2040 (see the Government’s Air Quality Plan) and highlights the Government’s ambition to achieve crucial aspects of its Industrial Strategy (reported on here). We set out below the key intention of the Strategy and other recent developments from the Electric Vehicle (“EV”) sector.
Road to Zero
(i) Electric vehicle charging infrastructure
The Strategy outlines the Government’s plans to create one of the prominent EV infrastructure networks in the world. To achieve this ambition the Government intends to establish a £400 million EV Charging Infrastructure Investment Fund (“CIIF”) that will be managed and invested in on a commercial basis by a private sector fund manager. A request for proposal (“RfP”) was launched on 23 July 2018 to identify the fund manager with responses due by midday on 21 September 2018.
Turning to residential infrastructure, the Strategy outlines the Government’s proposal to ensure that all new houses built in the UK are “electric vehicle ready”. Although regulations are currently in place, the Government proposes to open up a consultation shortly on introducing chargepoint infrastructure on new dwellings. Furthermore, the Strategy confirms that all new street lighting columns will be fitted with vehicle charge points to “bolster on-street charging solutions” and help boost residential charging infrastructure.
The Strategy also highlights the continuance of and alteration to existing schemes to address the challenge of the UK’s charging infrastructure. The Government have committed to maintaining the Electric Vehicle Homecharge Scheme until at least March 2019, whilst also committing to increase the levels of the Workplace Charging Scheme, providing up to £500 off the installation costs of charging sockets deployed at workplaces for consumers and fleets. The Strategy also establishes the Electric Vehicle Energy Taskforce, recognising the need for the energy and automotive industries to coordinate and plan for the EV transition.
(ii) Vehicle emissions and uptake
The Strategy outlines the actions being taken to reduce emissions from the 38.9 million vehicles already on the road, including a proposed increase on the use of low carbon fuels, including hydrogen. In addition to the Government’s enshrined commitment to increase low carbon fuel use (see the latest changes to the Renewable Transport Fuel Obligations Order), the Strategy outlines The Department for Transport’s Future Fuels for Flight and Freight Competition (“F4C”) as further evidence of the Government’s commitment. F4C provides funding to applicants who have put forward proposals to develop advanced low carbon fuel production facilities.
The Strategy also looks at the increased focus on improving existing vehicles through the retrofitting of new pollution-reducing or fuel-saving technology. Funding will be provided to existing schemes, such as the Low Carbon Vehicle Partnership’s Clean Vehicle Retrofit Accreditation Scheme, whilst local authorities will be able to bid into the Clean Air Fund which supports the retrofitting of vehicles with accredited technology.
(iii) Driving uptake on zero emission vehicles
To incentivise the uptake on zero emission vehicles the Government have outlined in the Strategy a need to improve affordability of such vehicles for consumers. The current UK incentive package removes the payment of vehicle excise duty (“VED”) for zero emission vehicles and in April this year HM Treasury announced that almost all drivers of purpose built ultra-low emission taxis, bought from April 2018, will be exempt from paying the VED supplement on vehicles over £40,000. To promote uptake of ultra-low emission vans, the Government are consulting on a new van VED regime linked to emissions. Government has also outlined their proposal to improve affordability by continuing the plug-in car grant until “at least 2020” and maintain the current rates of support until October this year. It is proposed that some form of consumer incentive will continue beyond 2020.
Automated and Electric Vehicles Act (“AEV Act”)
Linked to the Government’s proposals regarding green infrastructure is the passing into legislation of the AEV Act (reported on here), which received royal assent on 19 July 2018. The AEV Act provides powers to central Government to mandate the installation of charging infrastructure at key strategic locations, such as motorway service stations, if required, and enables Metro Mayors to designate chargepoint provision at large fuel retailers. The AEV Act:
- gives the Government powers to ensure that chargepoints are ‘smart’ and able to respond to the needs of network operators and suppliers to manage demand;
- gives the Government powers to standardise payments, introduce reliability standards and access requirements; and
- ensures key chargepoint data is made public.
The AEV Act will help the Government to deliver on their Strategy promise to “improve the consumer experience of public infrastructure to ensure charging is straightforward”.
Getting more out of electricity networks by reforming access and forward looking charging arrangements
In their latest network charging consultation published 23 July 2018 on the reform access and forward looking charging arrangements, Ofgem considered how the increase in EV uptake could put pressure on the electricity network due to increased charging requirements.
One of the key proposals related to EVs is to ensure small residential users who wish to charge their vehicles at peak times pay the associated additional network charges. For commercial users, those willing to accept less than ‘firm’, constant access could benefit from quicker connection and lower network charges. Alternatively, the consultation considers time-profiled access whereby a large user could choose to have seasonal or off-peak access to the network. Short-term and long-term access rights are also considered; the former offering real time access as “on the day” conditions allow, whilst the latter enables a user to choose a 15-year access right. A final consideration for large users is the development of local or shallow access rights, which could enable additional access to local networks to be made available in situations where capacity further upstream is fully utilised.
Ofgem future insights
On 23 July 2018, Ofgem published an insight paper on the various implications of EVs on the electricity system. The current system of regulation is not designed with EVs in mind (particularly as currently most charging is occurring at home at peak times). Among those implications outlined in Ofgem’s paper is the difficulty predicting the scale of EV take up and, as a result, designing an electricity system that is fit for purpose. The insight paper makes the case for flexible charging as the best option for EV integration, including:
- promoting charging when there is excess generation on the system;
- alleviating network constraints by switching charging to times when there is sufficient network capacity; and
- considering the system benefits and requirements in order to ensure that flexible charging is implemented.
Ofgem’s paper also considers the importance of vehicle to grid (“V2G”) technology in providing additional system benefits by EVs providing spare capacity and ancillary services to the network, including Distribution System Operators in due course. Similar to smart charging, there will be challenges in developing the sophisticated infrastructure to communicate with the relevant stakeholders and determine when discharge from the relevant EV is required. However, as a pooled resource, the growing number of EV batteries could provide a wider range of valuable grid services, from demand response and voltage regulation, without compromising driving experience or capabilities.
Ofgem’s network charging consultation closes on 18 September 2018, with a target date of April 2022 for the first set of changes to be implemented and the remaining changes to take effect by April 2023.
However, as Ofgem’s insight paper makes clear, this is the beginning of the road for the regulation of the electricity system during the EV transition, which will be an increasingly important factor in all regulatory matters, including price controls going forward.