Graeme Cooper, project director for transport decarbonisation at National Grid, says electric vehicles and renewables are mutual enablers, while digisation of energy and transport brings a smart, flexible and decarbonised system closer to reality.
The decarbonisation of transport and energy are symbiotic, says Cooper. Thirty million cars alone will need lots of power. A renewables-dominated power system needs vessels that can take excess generation when required, and adjust consumption when the system is tight.
Without those elements, price cannibalisation makes financing renewables projects increasingly difficult.
Digitisation is another cornerstone, says Cooper, providing visibility both up and downstream, enabling a smart system where demand and supply can be co-ordinated. Otherwise the UK’s wiring system would inevitably become overloaded – and the required upgrades extremely costly.
“The switch to EVs allows you to have demand that is moveable in time,” says Cooper. “Which means when there is spare electricity, you can dump it cheaply into cars. When it is expensive, you can say, ‘do you mind not charging today’? That means transport gets cheaper and cleaner.”
Once those cornerstones are in place, he thinks innovation must follow – because charging networks will make relatively little money from retailing power.
“Electricity for transport is incredibly cheap,” says Cooper. “Charging networks will need to make money from other aspects.”
He sees parallels between the early days of the mobile phone industry.
“When the mobile networks were being built, everyone thought the competition was in the network. There were huge auctions for spectrum. But once the coverage was in place, the competition was not around the infrastructure, it was around the offering,” says Cooper.
“The car charging community has a chance to get to that point. It is not about who has the biggest network, but around the offering – seamless, quick, bundled, value adds. That is where I see great opportunity for business model innovation.”
National Grid is working on plans to enable a high-powered motorway charging network that makes best use of transmission capacity.
The key challenge is one of timing, says Cooper.
“Most of the early EVs are not capable of high-powered charging. So for the moment, there is not a massive demand on motorways for EV charging. But you know it is going to be really important – nobody chooses to pay a big premium for motorway petrol, yet motorway services are always busy.”
Moreover, people need certainty that they can charge when and where they need to before they decide to invest in an electric car over an ICE equivalent, says Cooper.
“People need continuity and consistency wherever they go. So high power en route charging could only be 8-10 per cent of energy retailed, but it becomes the most critical for those ‘out of pattern’ journeys.”
Right now, six 150kW chargers is “probably fine” for motorway charging stations. “But typically, motorway service stations have 20-30 pumps, so how many chargers and at what rating will you ultimately need? The answer to that question will tell you the grid connection required. Do you build that incrementally? That is very inefficient. But at the same time, does it feel right to bring in 10MW of capacity today, knowing that it will be underutilised for the first few years?”
The government’s £500m fund for rapid EV charging is therefore welcome, says Cooper.
“The interesting thing is how to deploy that – to get the right capacity in the right place at the right time,” he says. “Is it short term, for today, or long term, knowing it won’t be fully utilised? Then you have the conundrum of how to recover that cost. What is the price premium that may need to be levied?”
Business model pivot?
Cooper thinks that question, as well as falling service revenues for carmakers, leasing companies and dealers, will drive business model innovation from the automotive sector.
“If you are a captain of industry and want to pound the motorways in an electric Range Rover, why wouldn’t you bundle ‘Jaguar Land Rover Power’ into the monthly lease?” says Cooper. “That is much neater – and then the charging networks have agreements with a handful of leasing companies, which is more financially robust.”
Tesla already takes that kind of bundled approach, and Cooper thinks other OEMs, or those financing the cars, may need to adopt a similar model.
“If I was a leasing company, I’d be concerned about depreciation. Who in four years time will want a four-year old diesel? Nobody is giving volume discounts on EVs and then there is the loss of maintenance revenue, because EVs require a lot less servicing. So leasing companies have to consider where value is lost and gained and look at new revenue streams that are financeable in the long term,” says Cooper.
“If they are not already thinking about this, they may not be in business much longer.”
In the meantime, Cooper urges the energy and automotive industry – and its regulators and policymakers – to work as closely as possible.
“People will not thank us if we get this right. But they will blame us if we get it wrong, so we need to fight the status quo rather than each other. If we want to do this properly, collaboration is key.”
Smart charging versus V2G
Cooper has consistently stated that the UK’s power infrastructure can handle the huge increase in demand by swapping petrol and diesel for electricity – provided smart systems are in place.
“Flexibility is really important, but I think we can get a long way with smart charging – controlling when the power goes into the car.”
While vehicle-to-grid is “an important principle”, Cooper thinks a greater volume of two way flexibility from EV batteries may come from second-life car batteries in peoples’ homes rather than “sitting on four rubber tyres.”
But he says there may be some “killer applications” for V2G, especially where cars are parked for long periods of time.
“We have to explore these things, because that will lead to innovation, so V2G is important. Is it some magic bullet? No. Is flex critical? Yes.”
The EV report 2020 This interview was originally published in our 2020 EV report. It’s packed full of insight from businesses that are preparing for the road ahead. The report also contains a comprehensive survey of businesses and public sector organisations around charging infrastructure. Sponsored by Arup, EDF, Good Energy, NewMotion and Total Gas & Power, the full report is available as a free download here.