Ofgem to ensure electric car revolution unlocks full benefits for consumers
- Our priorities will ensure electric vehicle (EV) rollout unlocks full benefits for consumers and the environment, and reduces the cost of the energy system.
- Adopting smart charging and vehicle-to-grid technology will help keep bills lower over time for consumers.
- Proposals will bring down costs of installing new electric vehicle charge points where they are most needed.
Ofgem has today set out how it will support the rollout of electric vehicles (EVs) in Britain, ensuring that the infrastructure and technology is in place for the rapidly growing number of EVs on the road, with an estimated 14 million by 2030 (1). This will include:
- Ensuring the energy network is prepared for EV uptake. Ofgem will ensure network capacity is in place to support the rollout of electric vehicles, with billions more in network investment expected to follow as part of our next network price control (2). Investment is already taking place, with £300 million approved by Ofgem in May 2021, half of which will be used to develop EV infrastructure, including rapid charge points (3).
- Making connections to the energy network easier. Ofgem is proposing to bring down costs for large users, such as electric vehicle charging stations, of connecting to the grid where reinforcement is required (4). This is an important change that will enable a greater number of people to have access to charge points where they need them.
- Maximising the benefits of smart charging. Smart charging electric vehicles at periods of low demand will enable EV owners to fuel their EVs for less, and will make more efficient use of the system as a whole, saving money for everyone. (5).
- Working to support the development of vehicle-to-grid. Vehicle-to-grid technologies will allow EV owners to earn money by exporting electricity back from their car battery to the grid when it is most needed. This will help reduce the amount of electricity generation needed at peak times. Exporting electricity through vehicle-to-grid, if combined with an uptake of smart charging, could reduce peak demand equivalent to the generation capacity of up to ten large nuclear power stations. (6). This would reduce the overall cost of running the electricity system and help keep bills lower for all consumers, including those who do not own electric vehicles
- Helping drivers switch to EVs. Ofgem will work with energy suppliers and innovators to make sure there are a range of products, services and tariffs for UK energy consumers to take advantage of. It will ensure consumer protections are updated to keep up with technological and business model change.
Launching Ofgem’s strategy to consumers at Fully Charged Live Neil Kenward, Ofgem’s Director of Strategy and Decarbonisation, said:
“Electric vehicles will revolutionise the way we use energy and provide consumers with new opportunities, through smart products, to engage in the energy market to keep their costs as low as possible.
“Our electric vehicle priorities not only provide a way to meet our climate change targets but importantly offers ways to protect consumers from rising bills, through a three-prong approach of increased use of electric vehicles, smart charging and vehicle-to-grid technology which together can help drive down costs for all GB bill payers.”
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Notes to editors
(1) The Committee on Climate Change’s Sixth Carbon Budget Balanced Pathway projects that the number of pure EVs on the road could grow rapidly to 14 million by 2030 from half a million in 2021.
(2) Ofgem will in 2022 announce its next electricity distribution price control (RIIO-ED2) expected to enable billions of pounds of investment in the local distribution networks which will help support EV charging infrastructure. This week Ofgem also announced £450 million innovation funding that will be made available over the next five years to fund big, bold and ambitious projects that help us get to net zero, including those that will help support the EV rollout.
(3) In May 2021, Ofgem announced £300 million for additional network investment as part of the RIIO-ED1 Green Recovery Scheme. Around half of this investment is for new EV charging infrastructure such as cabling and substations that will provide the network capacity to support 1,800 new ultra-rapid charging points at motorway service stations, tripling the number of these public charge points, and a further 1,750 rapid public charge points at other key transits and city hubs to reduce EV range anxiety and improve consumer confidence.
(4) Any new large electricity user connected to the distribution network – such as an electric vehicle charging depot – currently has to pay for the costs of reinforcing the local grid if additional capacity is needed. These connection costs can be particularly high where the grid currently has less capacity, and in areas where there is already a lot connected to the local grid and there is a need for more infrastructure. We are proposing to remove connection charges for these network reinforcements, and instead recover these costs through the ongoing network charges paid by all users of the distribution system. This will make it cheaper to install new EV charging stations in the locations they are needed. This change applies to the reinforcement (upgrades to existing network), but not the extension asset (new network) component of charges.
(5) Ofgem has already announced its decision to introduce Market-wide Half-Hourly Settlement (MHHS) which will place the right incentives on energy suppliers to develop and offer new tariffs and innovation that encourage more flexible use of energy, for example time of use tariffs, automation, vehicle to grid solutions and battery storage.
(6) The National Grid ESO’s Future Energy Scenarios 2021 (FES) publication identifies that V2G could provide a temporary demand reduction of between 8GW and 20GW by 2050 with up to 45% of consumers participating with V2G, depending on the future energy scenario. When combined with demand reductions from smart charging, this could be up to 32GW (dependent on the scenario) – the equivalent of 10 large nuclear power stations.
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