There is no magic bullet for adapting an energy network for electric vehicles. That’s why it’s essential for governments and regulators to work hand-in-hand with the energy industry and to embrace innovation and creativity to develop the required solutions,
writes Mark Bygraves
The expected surge in uptake of electric vehicles on Britain’s roads is a game-changer for the country’s energy network.
Demand from EVs is expected to drive up peak demand by a staggering 6–18 GW
(12–36 per cent) by 2050, according to National Grid.
Preparing and adapting the energy network for a change of this magnitude is no simple task, and a huge amount of work is being done by the government, regulator Ofgem, National Grid and the energy industry in this area.
For instance, significant thought is being given by industry to what charging infrastructure might look like, including proposals for superfast charging facilities along UK motorways. Meanwhile, in Parliament, an EV Bill which will address key areas of EV regulation is nearing its passage through the legislative process.
As the body responsible for administering the Balancing and Settlement Code (BSC) – one of the most important industry codes underpinning the electricity wholesale and retail markets – Elexon is also playing a crucial role in addressing the EV challenges.
From leading the development of market-wide Half Hourly Settlement (HHS) and EV lamppost charging to conjuring evolutionary solutions for the market, Elexon is committed to supporting and facilitating the innovation needed for the network to be ‘EV ready’.
One of the greatest concerns with the uptake of EVs is the risk of ‘brownouts’, caused when multiple vehicles charging in close proximity to each other place significant strain on the grid. Ofgem has tasked Elexon with leading the design of the market-wide HHS, a crucial project that will enable dynamic Time of Use Tariffs (ToU). These will help move demand created by EVs away from peak times, minimizing the strain on the electricity system.
We are leading on this work through the Design Working Group (DWG). Chaired by Elexon, with members appointed by Ofgem, this vital group is made up of specialists from all aspects of the energy community, including consumer representatives, industry organizations and innovators. This work forms a crucial element of Ofgem’s Significant Code Review (SCR) on Electricity Settlement Reform.
We are delighted with how the work has progressed so far. As planned, the DWG has now developed five draft Target Operating Models (TOMs) which describe options for the end-to-end settlement process for HHS.
We are currently seeking input from stakeholders on the design and evaluation work to date. The DWG will develop the final detailed TOM, taking into account the outcomes of Ofgem’s related policy decisions.
Following its decision on the Business Case, Ofgem will then decide if, and when, to implement market-wide HHS. The DWG is an excellent example of the energy industry taking the initiative and coming together to develop innovative solutions to important challenges.
It is vital to ensure that the needs of the consumer are placed at the heart of the UK’s preparations for the transition to EVs and that we seek opportunities to embrace new innovation in the short term as well as the long term. Elexon has recently published proposals that could quickly unlock new business models that would enable innovation and customer choice. Our White Paper, Enabling customers to buy power from multiple providers, suggested consumers would stand to benefit from having multiple suppliers in a future energy system. Our current energy system typically requires each customer to have one supplier at a time – a model often referred to as a ‘supplier hub’.
As Ofgem noted in its November call for evidence on future supply market arrangements, this supplier hub principle could present barriers to innovative solutions and exciting new business models in the market. This includes community energy schemes to share exported generation between community members and allow electric vehicle manufacturers to offer leases, including all the electricity needed for charging, on a price per mile basis.
The supplier hub principle also presents a barrier to peer-to-peer trading between customers, where a consumer is able to buy a neighbour’s excess power, generated from sources such as solar panels, or from vehicle-to-grid energy. Both possibilities could have notable cost saving implications for consumers in the future energy system.
While Ofgem has opened the debate on the ‘supplier hub’ principle, the required changes to move to a multiple supplier world may take five years or more to be implemented. These changes are very complex and would require a substantial collective effort from the entire industry. Any reform would also need take into account the impact on all customers, including those less involved in peer-to-peer trading and other innovative energy business models.
However, in our White Paper on multiple providers, we showed there are tactical changes to the central market rules and arrangements that can enable us all to realize the benefits of a multiple supplier world much earlier.
Rather than a complex and time-consuming overhaul of the current system, we suggest simply introducing a customer notification agent (CNA) that will inform Elexon’s central settlement systems of any energy volumes bought by customers from someone other than their main supplier. Elexon could then validate the submissions for consistency with data from customers’ meters, and use them to allocate energy volumes to each organization supplying energy to a given customer. This approach enables us to realize the benefits for consumers and suppliers without a costly and time-consuming industry overhaul.
Elexon is currently gathering views on its proposal. If we get support – either from industry or other interested parties, including community suppliers and technology developers – we will then start the process of implementation through a series of phases to maximize the opportunity for full scrutiny and for all stakeholders to input.
As part of the Department for Transport’s (DfT’s) On-Street Residential Charge Point Scheme, the Office for Low Emission Vehicles (OLEV) is expecting large numbers of ‘slow’ charge points to be installed in unmetered lamp posts. This allows customers without access to off-street parking to charge their vehicles close to their home. In addition, the cost-effectiveness of lamp post charging solutions means that it is being taken up by many local authorities, particularly in London.
Elexon has been involved in developing settlement requirements for these products and has been in contact with key stakeholders, including manufacturers of charging technology, to explore ways of removing any potential barriers to lamp post charge points in the BSC. Based on our work in this area so far, we believe that the regulatory requirements for EV charge points are too complex and need to be simplified. The regulations span multiple pieces of legislation and energy industry codes, and cut across different areas of government (DfT, BEIS, and OLEV).
While we support the development of charging standards, we believe it is vital to avoid the risk of these standards adding further regulatory hurdles or complexity for technology manufacturers.
Consideration will also need to be given to those charge points already installed or those planned to be installed. We would therefore support any efforts to ensure that the various regulatory requirements are ‘joined up’, clear and transparent to all potential participants in the EV charging market.
More widely, we are currently developing an Elexon sandbox for the electricity market to test innovative ideas.
The first such regulatory sandbox to be introduced by a code administrator, this mechanism will be invaluable in enabling the BSC and Elexon to support new innovations, delivering benefits to industry and consumers. We will also work to integrate with Ofgem’s existing sandbox so that progress and learning are shared across the industry.
We expect our sandbox to play a vital role in testing the ideas and innovations that will help pave the way for an EV transition that works for consumers.
The transition to EVs is well underway and we can expect to see EVs become a more common sight on our roads. Of course, there is no magic bullet when it comes to adapting the UK’s energy network for a change on such a large scale. It will therefore be essential for the government and Ofgem to work hand-in-hand with the energy industry, and to embrace innovation and creativity to develop the required solutions.
Mark Bygraves is Chief Executive of Elexon