Written evidence from Wales & West Utilities Ltd (ELV0058) 

1.1 Background to this response

Wales & West Utilities Ltd (WWU) is a National Critical Infrastructure (NCI) company. We operate a fleet of around 1300 vans.

We don’t sell gas, instead we own and maintain more than 35,000 kilometres of pipes. Using those pipes – most of which are underground - we supply gas to around 2.5 million households and businesses across Wales and the southwest of England, serving a population of 7.5 million people.

We operate 24 hours a day, 365 days a year, providing a vital service.

Whilst the focus of this Call for Evidence is understandably on cars, as these represent most vehicles on the roads, a government focus on vans is also essential. Vans deliver a wide range of critical and non-critical services in the UK.

We have answered seven questions which relate to vans operated by WWU and similar businesses.

We have also included evidence to show that the current and anticipated light commercial vehicle EV market for 2030 and 2035 does not offer a full solution for the operational needs of WWU and similar businesses.

2. Answers provided by WWU to specific questions asked by the Committee - answers are provided to Questions 1, 3, 10, 11, 18, 21 and 24 only, as these are relevant to electric vans

2.1 (Question 1). What are the main obstacles to the achievement of the Government’s 2030 and 2035 phase-out dates? Are the phaseout dates realistic and achievable? If not, what steps should the Government take to make the phase-out dates achievable?

We consider that the main obstacles to achieving the 2030 phase-out date for diesel vans in our own fleet and similar operations are as follows.

• Unavailability of mission-suitable electric vans in the period to 2030 and beyond.
• Unavailability of hydrogen Fuel Cell Electric Vans in the period to 2030 and beyond.
• Unavailability of plug-in hybrid electric vans (PHEV) in the period to 2030 and beyond (the ZEV mandate requires all vans to have a zero-emissions capability from 2030).
• The existing public EV recharging network – which is fragmented, unreliable, and geographically skewed.
• The lack of planning for a strategic hydrogen vehicle refuelling network (like that planned by EU states for implementation across the bloc by 2030 to deliver infrastructure to serve cars, vans, and heavy-duty vehicles like buses and trucks).

To address these issues, Government should develop a stronger focus on vans and on alternatives to Battery Electric Vans, which don’t currently offer a viable solution for all sectors of the van market.

2.2 (Question 3). What specific national policies, regulations or initiatives have been successful, or have hindered, EV adoption to date? Are these policies or initiatives fit for purpose?

The UK Derogation in respect of Alternatively Fuelled Vehicles (AFV) to enable a commercial vehicle up to 4250kg GVW to be driven by a Category B driving licence holder is not suitable for WWU’s operational needs. The reasons for this are outlined in section 4.3 of our supporting evidence.

We think that this Derogation would benefit from amendment.

2.3 (Question 10). How is the Government helping to ensure that EVs are affordable and accessible for consumers, and are these approaches fit for purpose?

Although there is currently a grant available to cover the additional cost of an electric van, this does not cover the full additional cost of the vehicle.

In the current 5-year regulation period, GD2, OFGEM has granted WWU additional capital funding for the purchase of zero-emissions commercial vehicles, as part of our Gas Transporters Licence.

Neither the grant nor additional funding via OFGEM are sufficient to cover the additional capital cost of an electric van. This is because manufacturers’ discount rates for electric vans continue to be much lower than for diesel vans.

The cost of electricity – especially when purchased through the public recharging network – means that there is little to no cost benefit obtained through fuel. However, the present nil cost Road Fund Licence for an electric van provides some advantage, especially where annual mileage is low.

The 20% VAT rate imposed on electricity purchased via the public recharging network (rather than 5% as charged for domestic vehicle charging) is a significant discouragement.

2.4 (Question 11). Do you think the range of EVs on offer in the UK is sufficient to meet market needs? Which segments are under-served and why? Why is the UK market not seeing low cost EVs, particularly in comparison to China?

The van segment is under-served. Manufacturers are focusing on cars, where sales volumes (and the commercial impact of failure to meet targets) are much greater. The range of electric van specifications is limited compared with diesel equivalents.

Compared with diesel vans, the electric vans available typically suffer from significantly reduced range, long recharging times (compared to diesel refuelling), reduced payload, inability to tow trailers of suitable payload and are unsuitable for the installation of ‘on board power’ to power tools and equipment on site. This is critical for the operation of the gas network, especially when responding to emergencies.

Furthermore, no Hydrogen Fuel Cell Electric vans are yet available in the UK, and it is unlikely that this position will improve within the next 12-24 months.

2.5 (Question 18). What are the main challenges that UK consumers face in their use of EVs?

We think the main challenges in the case of electric vans are:

• Reduced range – very significant for a commercial vehicle.
• Further range reduction at low ambient temperatures
• Reduced payload – very significant for a commercial vehicle; WWU vans operate close to Gross Vehicle Weight (GVW) almost all the time.
• Lack of public rapid charging infrastructure, especially in rural areas
• Complexity of accessing public recharging facilities (to be addressed by ‘The Public ChargePoint Regulations 2023’)
• Where employees take their vans home, unsuitability of many domestic premises for installation of a home charger (most WWU vans are taken home at night for operational efficiency)
• At company depots, lack of capacity in incoming electricity supply to support rapid charging.

WWU has installed 67, 7.2kW (all-day/overnight) vehicle chargers in multiple depots, in all cases providing the maximum number of chargers that can be supported by the incoming power supply. However, these chargers can only ever partially support WWU’s electrified company car fleet (c. 300 units, of which > 85% are already plug-in, but <10% are EV).

2.6 (Question 21). How does the charging infrastructure for EVs need to develop to meet the 2030 target? Does the UK need to adopt a single charging standard (e.g., the Combined Charging System (CCS)) or is there room in the market for multiple charger types?

• The public DC rapid charging infrastructure needs to develop significantly to provide a much greater geographic spread and density. This needs to include rural areas, for example North Devon and mid-Wales. We recognise that there are significant practical barriers to this.
• For an electric van operator, only DC rapid charging will be sufficient to recharge a van during the working day. 
• Ideally, every rapid charger would be capable of always delivering a minimum DC charge rate of 115kW. We recognise that this could be difficult to achieve in many areas due to local supply constraints.
• Our view is that a single charging standard (CCS) is essential and that over time, the CHAdeMO pattern should be abandoned. Whilst this approach might seem counter-intuitive, it is likely to increase use and overall availability of the network in the longer term. It may be necessary for incentives to be offered to encourage this.
• Van manufacturers should be encouraged to develop 800V electric van architectures, as this offers a faster charging rate for any given charger output, reducing the time to achieve an operationally useful charge. Presently, such architectures are restricted to certain prestige car models (e.g., Audi, Porsche) and some models offered by Hyundai and Kia.

2.7 (Question 24). In terms of charging infrastructure, are there unique barriers facing consumers in areas of low affluence and/or multioccupancy buildings, such as shared housing or high-rise flats? Do you consider public EV charging points to be accessible and equitable compared to home-charging points? What can be done to improve accessibility and equitability?

For operational efficiency, most WWU van drivers (who are mostly gas engineers) take their van home.

Few employees can park their van off-street to use a domestic charger, and so, most of WWU’s future electric vans will rely on public rapid charging, placing additional demand on the network.

Consequently, we recommend that local authorities should be incentivised to provide overnight on-street charging (ideally at 7.2kW at least) e.g., at lamp standards.

We would encourage the development of a priority scheme by every local authority in England and Wales for the parking and overnight charging in marked bays of electric vans which are operated by National Critical Infrastructure fleets.

Where a domestic charger can be installed at a drivers’ home, the arrangements for reimbursing the driver for domestic electricity used for charging the company vehicle are administratively awkward or can be expensive to outsource, acting as a disincentive for a fleet operator.

3. Supporting evidence - why Wales & West Utilities will need hydrogen Fuel Cell Electric vans in future

3.1 Our vehicle fleet

Our fleet plays a crucial role in providing a safe and efficient service. We own and operate around 1,300 commercial vehicles, primarily vans up to 3.5 tonnes Gross Vehicle Weight (GVW).

•                    Over 75% of our vans are equipped to tow trailers - many do so every day.

•                    Over 55% of the total fleet is ‘plated’ to operate at up to 6.5 tonnes Gross Train Weight (GTW), i.e., to tow trailers weighing up to 3t.

•                    35% of the fleet is equipped with on-board electrical and pneumatic power for tools and equipment used on work sites.

•                    Our fleet uses around 4.5 million litres of diesel fuel to cover nearly 14 million miles every year and power tools and equipment.

3.2 Fleet replacement

As a regulated business, we buy our commercial vehicle fleet outright, replacing vans every 6 or 7 years, depending on type and duty. The typical cost of converting a van to suit operational requirements is around 50% of the capital cost, hence the long-life cycle.

WWU will purchase around 200 new vans a year to maintain our fleet, representing a total capital spend in the range £6m - £7m.

3.3 Finding an alternative to diesel.

Findings from a 2021 Cenex study showed that less than half of WWU’s daily diesel van journeys could be completed by battery-electric vehicles (BEV). This was even assuming that the latter could be recharged overnight.

The same study found that for a hydrogen Fuel Cell Electric Vehicle (FCEV), 95% of WWU’s daily journeys could be met, assuming that daily refuelling would be available.

A hydrogen FCEV can be refuelled in a few minutes, like a diesel vehicle. It is also likely to be lighter than an equivalent BEV, and unlike most BEV’s, could meet operational towing payloads. FCEV will not suffer battery range degradation in cold weather.

3.4 New vehicle supply

Since the pandemic, the UK has suffered from a continued supply shortage of new diesel vans. This shortage affects the reliability and environmental impact of our fleet and is likely to get progressively worse, as government targets for the sale of BEV’s further restrict the availability of ICE diesel vans up to 2030.

3.5 The Zero Emissions Vehicle mandate

The anticipated 2030 Government ban on the sale of diesel-fuelled cars and vans could have a significant impact on WWU’s ability to replace its current diesel-fuelled fleet. The proposed ZEV mandate mechanism will progressively restrict the supply of diesel vans at a time when a suitable zero-emissions alternative does not exist for the majority of WWU’s fleet.

The proposed ban therefore poses risks to potential business continuity, operational efficiency, and costs for WWU and other fleet operators of diesel vans that are high energy consumers or cover long distances every day.

Consequently, WWU sees that hydrogen FCEVs are a vital alternative to BEV’s, allowing us to start replacing our current ICE diesel fleet with an operationally efficient, zero-emissions alternative well before 2030.

Government recognition of this issue - the pressing need to encourage the development of hydrogen Fuel Cell Electric vans and early, effective, and ongoing support for the development of a hydrogen refuelling network operating at 700 bars – would be most welcome.

4. Further supporting evidence

The rationale for FCEV at 3.5t GVW in WWU and other fleets with high energy usage vans:

4.1 WWU’s current diesel ICE vans and other ICE light commercial vehicles:

a)    Routinely operate close to, or at, GVW for most or all the time; and/or

b)    Frequently tow trailers (e.g., carrying a mini digger), at a Gross Train Weight (GTW) of up to 6.5 tonnes; and/or

c)     Are equipped with vehicle engine-driven ‘on-board power’ systems, e.g., for air compression and generation of mains-voltage electric power to power portable equipment on site, and/or

d)    Are based at the driver’s home address (not at a central depot) to minimise driven mileage and deliver greatest operational efficiency and

e)    Their drivers rarely have access to off-street parking and therefore cannot charge a BEV when off-duty.

4.2 Compared with the diesel ICE vans currently used by WWU, BEV’s:

a)    Are significantly heavier than their diesel counterparts, reducing available payload and operational effectiveness (an expected reduction of 25% is typical).

b)    Most are unable to tow a trailer with an operationally effective payload (or at all)

c)     Have a significantly shorter effective range than a diesel van (a reduction of 65% is typical)

d)    Suffer from a further significant range reduction in cold ambient temperatures (c. 30%)

e)    Will in most cases be forced to rely on the public charging network, creating further pressure in an area that the Government already acknowledges as needing significant improvement.

4.3 UK Derogation from EU law

To help encourage the adoption of alternatively fuelled goods vehicles (AFV), there is a UK Derogation from EU law that permits the holder of a Category B driving licence entitlement (up to 3.5t GVW) to drive an AFV up to 4.25t GVW.

Unfortunately, this Derogation is of no practical use to WWU because:

a)    It does not permit a Category B licence holder to tow a trailer, a critical operational requirement.

b)    To enable the driver to tow an operationally useful trailer, they would need to be re-trained to hold a C1+E entitlement, increasing cost and impacting operational efficiency.

c)     The AFV must be fitted with a calibrated speed limiter, which limits the maximum speed to 56mph and not 70mph, potentially increasing the response time to attendance at a Public Reported gas Escape.

d)    If the AFV is driven more than 100km/62 miles from base (which it may well be when responding to a Public Reported gas Escape), then the driver (whose primary job is gas engineering, not driving) must comply with Drivers’ Hours regulations, significantly restricting available duty hours.

e)    It requires the AFV to be MoT’d every year in the same way as an HGV at an Authorised Testing Facility, increasing operating cost.

f)      5 hours’ training is required for every driver, which is not the case with an AFV not exceeding 3.5 tonnes GVW, increasing operating cost.

g)    The speed limiter and, where appropriate, tachograph, both require periodic calibration, increasing operating cost.

h)    Unless the derogation were to be extended to permit operation at a minimum GTW of 7.25t, it would not be possible to tow trailers of up to 3t, introducing operational inefficiencies.

Ideally, this Derogation would be amended by Government to address the above points, to enable FCEVs operated by utility and other fleets to benefit from it.

4.4 If all the above points were to be addressed through prompt legislative change, subject to the availability of refuelling facilities, a FCEV will still offer significant advantages compared with a BEV, including but not limited to:

•                    Greater payload

•                    No range reduction in extreme ambient temperatures

•                    Refuelling time equivalent to ICE

•                    Greater potential to generate on-board power.