Written evidence from UK Power Network (ELV0070) 

15 September 2023

Dear Sir or Madam,

House of Lords inquiry on Electric Vehicles

Thank you for the opportunity to provide input into your inquiry into the transition to Electric Vehicles. This response is on behalf of UK Power Networks’ three distribution licence holding companies: Eastern Power Networks plc, London Power Networks plc, and South Eastern Power Networks plc. We are GB’s largest electricity Distribution Network Operator (DNO), dedicated to delivering a safe, secure, and sustainable electricity supply to 8.5 million homes and businesses.

In the appendix we answer a subset of the published questions, which are relevant to our role.

As the DNO with the greatest number of registered EVs – over 400,000 (35% of the total across all DNOs), and the greatest number of public charge points in our licence areas (over 21,000) – we already support the transition to electrified transport. Our goal is clear: we will facilitate the connection of as many charge points as our customers require, as quickly and cheaply as possible, whilst continuing to operate a highly reliable network that supports all EV charging needs. We expect to be easing the connection of up to 3.6m EVs by 2030 and have worked extensively with Ofgem to ensure the regulatory framework is suitably agile and flexible to enable us to respond to any change of pace.

Earlier this year we revised our EV Strategy to highlight the practicalities of how we can help customers during the transition.[1] The latest strategy provides insight into the types of practical obstacles that we and our customers are encountering, and how they can be overcome. It explains not only how we are ensuring that the network will be fit for the transition, but also how we can help customers to switch to electric motoring in ways that suit them and as painlessly as possible. Many initiatives follow research and innovation projects to identify better ways of helping customers.

We are supportive of the Government’s EV infrastructure strategy of March 2022, which includes the decision to impose a duty on local authorities to ensure the adequacy of local EV charging infrastructure, and of the EV Smart Charging strategy of January 2023.

The envisaged broad structure for EV charging is in our view the right one, with most domestic consumer charging performed at home or on street (we estimate that this charging will constitute 76% of the total by 2028, up from 73% today) with most of the rest provided by commercial service stations for people “on-the-move”. We agree also that the “on street” segment is the one most in need of Government intervention for reasons of social equity and in order to offer a degree of smart, neighbourhood charging to residents without off-street parking. The market may not otherwise supply at anything like comparable cost or convenience to private home charging. Our Charge Collective project provided evidence of this market failure as well as helping selected local authorities to overcome it.[2]

Smart charging (V1G) and vehicle to grid (V2G) technology offer a huge opportunity to lower costs for consumers, though the high cost of V2G (at around £4,000) remains a barrier. To support flexible charging, we have created the UK’s first independent Distribution System Operator (DSO), which is committed to encouraging consumer-led flexibility and in a way that reduces network costs. We applaud the Government’s recognition of the benefits (estimated at £3.2 to 4.7bn per annum from 2030[3]), that a smart and flexible system can deliver to customers and the various workstreams being pursued by Ofgem and OZEV to enable it.

The following provides a few key examples of where we’ve reacted to feedback to remove barriers:

There may be obstacles to realisation of the timescales for the EV transition, but the current regulatory regime at Distribution level is not one of them and UK Power Networks is dedicated to ensuring that our electricity network can cater for whatever level of demand is placed upon it.

Our detailed answers to your questions can be found in the appendix to this letter.

Appendix – responses to call for evidence questions.

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

Meeting the targets depends on charging infrastructure being in place and on EVs being available for customers in sufficient numbers, at an affordable price and with acceptable performance (including range). We can only really comment on the charging infrastructure element of this.

Our electricity networks are not and will not be an obstacle. We believe that Ofgem’s regulatory framework for electricity distribution is fit for purpose. It has enabled and will enable us to invest where and when is needed – at least until the end of the current regulatory period in 2028.

The long delays highlighted in recent months for connection of new wind and solar farms to the grid are sometimes portrayed as evidence of a wider lack of preparedness for all kinds of low carbon technologies, including electric vehicle chargers. This is not the case. The delays connecting offshore windfarms relate to critical transmission network capacity, which in turn impedes connections of large-scale generation projects in some distribution areas, as well as issues with the queue management process, which was not designed to accommodate the high volumes of new generation and storage facilities.

EV chargers constitute new demand for power rather than new generation supply. UK Power Networks has already facilitated connections for chargers for the 403,000 EVs registered in our network areas (as of February 2023) (35% of the national total). So far, the total extra demand arising from these connections has been lower than the underlying broader and long term trend fall in demand for electricity in the wider economy.

At the local level we are aware that EV clusters can create demand constraints, hence we have focused on better monitoring potential hot spots and making use of market-based flexibility to help manage demand uncertainty. A UK net increase in demand is expected from 2025 as EV penetration ramps up[8] but the spare capacity at distribution level in most areas and the potential for demand flexibility (in particular off-peak charging of EVs) will mean that the need for significant reinforcement of electricity networks will be measured in the period to 2030.

The allowances offered to us by Ofgem for RIIO-ED2 (2023 – 2028) provide for an average rise in overall expenditure (totex) of up to 25% over the previous regulatory period. Within this overall allowance there is room for us to increase load-related (demand-related) expenditure more substantially, if that is necessary to respond to EV purchases or any other installation of low carbon technology. Load-related expenditure only accounts for 15.7% of totex so the impact on customers of any such rise will be modest.

The network impact from EV charging depends also on the extent to which consumers participate in smart charging. We are encouraging the use of flexibility as it will minimise the network cost associated with EV adoption. However, where flexibility is not feasible or delivers insufficient capacity to meet customer needs, we are investing in new network capacity using a data-led approach. We are also future-proofing needs by uprating network interventions to take a “touch it once” approach where appropriate, which avoids additional cost and disruption to customers.

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?

Our ability to support EV charging robustly depends on our own regulatory regime, as laid down by Ofgem. The RIIO-ED framework has provided the incentives for us to invest where necessary, develop high customer service standards and innovate for customer benefit. The increase offered to us for the five-year regulatory period from April 2023 and the introduction of uncertainty mechanisms means we can react in an agile manner to demand data.

Apart from the decision to ban the sale of petrol and diesel cars from 2030 and subsequent deadlines also for heavier vehicles and the direct financial investment Government has made in EV charging, we would cite three further decisions in particular, which are of considerable importance:

• The EV infrastructure strategy of 25 March 2022 places a statutory duty on local authorities to ensure the necessary supply of public (mainly on-street) charge points in their localities whilst the Department for Transport focuses on supporting a network of rapid and ultra-rapid charge points around the country. The alternative option of supporting the build-up of “destination” charging at car parks and other locations around the country was rejected. Home charging in driveways and garages and charging at work will increasingly be left to the market. We support this strategy.
• The May 2022 Access Significant Code Review (Access SCR) decision by Ofgem to change the charging regime for those requesting substantial new electricity connections from April 2023. This has the effect of relieving installers of public EV charge points from having to pay the costs of upstream reinforcement of electricity networks, where new demand results in capacity insufficiency. This will reduce a financial barrier in particular to the installation of rapid and ultra rapid charge points in service stations in some locations.
• The ongoing support for smart charging of EVs, most recently in the form of the January 2023 EV Smart Charging Action Plan, together with policy in Ofgem to support electricity market reform to reward the growth of consumer-driven electrical demand flexibility.

Following these initiatives and the boost to supply of motorway rapid charging stations under the Green Recovery programme, UK Power Networks expects market demand for rapid charging, alongside home and workplace charging, to develop with little further governmental intervention.  Developers will, however, continue to have to meet the cost of user-specific network extensions, so there may still be some cases where electricity costs create place-based barriers to optimal spatial location of rapid charging facilities.

On-street charging, on the other hand, may require ongoing public support. The social value of ample facilities close to people’s homes for low-cost, smart charging over time is misaligned with commercial incentives for charge point operators to install just enough charge points for a succession of customers to download power as fast as possible and then release the charge point for the next customer.

OZEV and Ofgem promised in their January 2023 EV Smart Charging Strategy to build an evidence base on how far smart charging, including vehicle to network reverse charging (V2X), will reduce energy system costs, including studying the relative whole system costs and benefits of smart, slower, public charging (through decentralised networks) and rapid but linear charging (at central points). UK Power Networks has collaborated with Innovate UK and other organisations to gather evidence from around the world on V2X in particular.[9]

The financial burden on consumers without off-street parking is another factor. OZEV noted in their March 2022 EV Strategy that public charging was already 59-78% more expensive than charging at home, whilst smart charging and flexibility incentives can be expected to bring the relative cost of slower, smart charging down over time.

The amount of support that local authorities will need to ensure socially optimal on-street charging facilities will depend on how Government evaluates this and other evidence and assesses social equity and need against public spending pressures.

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 needs of all consumers must be considered to ensure full accessibility. We are aware of the work of OZEV with Motability and the BSI on accessibility standards for public charge points and agree that they should be mandated (including the area around the parked car and the charge point). We are proud to have been involved in the steering group for the development of these standards following completion of our extensive research project in 2020/21 into the needs of disabled EV drivers who park (and therefore charge) on-street.[10]

24. In terms of charging infrastructure, are there unique barriers facing consumers in areas of low affluence and/or multi-occupancy 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?

Connecting an EV charger to a customer’s home electricity supply point may not be straightforward. In multi-occupancy buildings electricity provision in the parking space area may be offered by a landlord or a facilities management company or shared across several residents. Some customer properties may also be on a shared electrical loop with other customers, requiring unlooping before an EV charger can be connected. Even where no unlooping is needed, some customers will need to have either a fuse/cut out upgrade and/or a LV service upgrade to ensure their electricity supply can cope with the EV charging demand.

Unlooping properties on a shared loop and fuse and LV service upgrades are generally “free” up front[11] for individual consumers with the cost of this work for networks reclaimed through the broader levy on electricity bills. UK Power Networks encourages online applications through our Smart Connect Installer portal[12] to speed up the process and quickly identify any need for this work. We also produce an Installer Guide for electricians and three quarters of EV connection applications are automatically approved. To speed up services work, when it is needed, we have agreed an engineering standard to empower electricians (meter operators) to do any necessary fuse upgrades for us.

However, unlooping can take time and there may be contractual issues for customers to address to separate electricity supply to their car from that of other parties in shared access spaces. Furthermore, where the landlord or another business owns the electrical connections, no home-charging service may be offered at all or the landlord may contract with a commercial charge point operator to provide a charging service to the consumer, in which case the terms and costs could be more similar to using a public charge point than to a domestic supply.

The big differences for consumers using public charge points rather than charging against their domestic meter are the extra cost and the lower demand flexibility of public charging. The consumer interest in maximum availability is also hard to square with the operator interest in high-capacity utilisation. The SmartSTEP project in London led by Element Energy[13] proved that smart charging functionality could be successfully incorporated into on-street chargers but availability of such charge points for the long periods needed for optimal smart charging could still be a challenge. Our Charge Collective project also looked at the feasibility of public smart charging.[14]

25. Is there a financial benefit to the consumer of choosing an EV over an ICE vehicle? Are there further benefits, aside from financial, that a consumer may gain from EV use?

Apart from the fuel savings and potential for claimed lower maintenance costs of EVs (fewer mechanical parts), a consumer with an EV and a private charging facility will also have the ability to participate in electricity flexibility markets. A consumer which also has solar PV panels, and a domestic battery and perhaps electric heat will have even greater flexibility to generate and store their own power, sell power to the grid as well as buying it and to charge their vehicle at lowest cost. Suppliers and aggregators are already launching service offerings to such consumers to help them exploit their flexibility to lower their bills.

The value of such flexibility to the grid can be considerable when it is aggregated together. UK Power Networks alone plans to purchase flexibility worth £66m in the coming years and National Grid is planning to purchase demand reduction from the market again this winter. Broader use of “time-of-use-tariffs” by suppliers and wholesale market reform should create further incentives for off-peak charging in the years to come and lower prices for those able to take advantage.

29. What are the challenges or concerns around grid capacity in relation to significantly increased EV adoption?

Electrification of transport, for goods as well as passengers, is likely to lead to electricity demand increasing by over a third by 2050, with about half of this increase materialising by 2035.[15]

Distribution networks currently have high levels of spare capacity – average peak network loading is about 60%. Peak load can therefore rise in many areas by 50% or more before there is a need for significant reinforcement at the distribution level and this level of overall demand increase is not expected before around 2032/33. Wherever demand can be shifted off peak, especially through demand management and storage, the ability of the existing network to handle increased flows of power is enhanced.

After 2032/33 the rate of demand increase is expected to rise sharply and the cost of expanding grid capacity will inevitably rise with it as more networks then need to be reinforced, but only a part of the cost will be attributable to passenger EVs.

30. What is the role of distribution network operators in ensuring EV infrastructure can be rolled out sufficiently to meet 2030 target?

The role of DNOs is to meet demand in a timely fashion – to not be a blocker to decarbonisation. But DNOs also have a responsibility to facilitate decarbonisation at lowest cost. Just as Ofgem has a duty to facilitate Net Zero but also a primary duty to protect the interests of current and future consumers, so DNOs must enable Net Zero, but at lowest cost to consumers and whilst delivering exemplary customer service and protecting the vulnerable.

It may sound like an attractive proposition to take a risk averse approach of reinforcing all networks in advance to cope with maximum possible demand, building out a street-by-street electrical infrastructure enhancement programme across the country.

But this would be extremely expensive and some of the work would be unnecessary. It would exacerbate pressures on supply chains and increase customer bills significantly, increasing inflationary pressures in the wider economy.  It would also dull pressure to run the grid with maximum efficiency, making maximum use of flexible demand and energy storage, voltage control, digitalisation, and other tools of advanced network optimisation. The potential of these tools will not be maximised if networks are systematically reinforced in advance.

UK Power Networks therefore favours:

• Prioritisation of a range of measures to support investment in flexible demand and flexible supply to reduce the overall cost of reinforcement.
• More sophisticated tools for measuring the evolution of demand from place to place and the capacity of the network to respond, including at very local levels.
• Timely and agile evidence-based investment in flexibility and/or in reinforcement, at distribution level, to avoid any constraints on demand.

In relation to EV charge points specifically in the period to 2030, this means providing timely power supply for all necessary connections. Whilst doing this, UK Power Networks will look at the scope for encouraging flexible demand, to reduce the cost of electricity for the customer and reduce the network cost of provision. For example, following our Optimise Prime research project we have developed a Site Planning Tool to help managers of fleet vehicle operations analyse how to optimise EV charging at lowest cost.

We will also measure the impact of existing connections and model the likely impact of new EV demand to assess where and when measures to strengthen the network are needed and will ensure that any new infrastructure is delivered in time to meet future demand.

31. What are the requirements, challenges, or opportunities for the development of public charge point delivery across the UK? How will the development of EV charging infrastructure in the UK interact with existing planning regulations?

There are at least two very different types of public charge points in addition to those voluntarily offered at “destinations” such as shops, airports, train station car parks etc.[16]

• on-street charge points, best suited for people without off-street parking but who are looking to replicate the convenience and lower cost, as far as possible, of home charging.
• rapid or ultra-rapid charge points for people on the move.

UK Power Networks supports the statutory duty on local authorities to ensure the necessary supply of public (mainly on-street) charge points in their localities. We are collaborating with all the local authorities in our area to develop Local Area Energy Plans.

The need for on-street charging will vary widely from one local authority to the next. One of the most pressing needs is in urban areas where drivers have no off-street parking, especially for residents who also cannot charge at their workplace. We see a particular need in London and a high proportion of the public charge points installed so far have indeed been in London.[17]  

There is a risk that commercial on-street charge points will fail to deliver the low costs and “smart” charging flexibility available through home charging. This would result in a “driveway divide” between those with off-street parking and those without.

Rapid and ultra-rapid charge points have a different rationale – provision of charging reassurance and capability for those on the move around the country. The charge will be provided in a linear fashion (download only) and competition can realistically be relied upon to drive down the cost to a fair level in most cases, but prices are and will probably remain significantly higher than the cost of charging at home.

The extra cost of charging on-the-go will result in most people charging at home most of the time[18] and there is a risk that the resultant market-driven density of “on-the-go” charging stations will be undesirably low in some areas. Over time and as manufacturers extend EV ranges, government will have to monitor whether the market is delivering the optimal density of charging stations or if intervention is required. Some stations in remote areas may have a de facto local monopoly, which may need to be regulated.

An alternative option of supporting the build-up of “destination” charging at car parks and other locations around the country through regulation was rejected in the Government EV strategy of March 2022. We support that decision as it avoids the need for costly electrical capacity for car parks and other facilities which may rarely be used.

32. What are the issues facing rural residents, urban residents, and sub-urban residents and how do they differ?

Rural and sub-urban resident drivers will mostly have access to off-street parking, but the minority who don’t will need attention, especially those who do not drive to work or cannot charge there. On-the-go “top-up” charging stations may also be relatively sparse in remote, rural areas, because of low demand.

Urban residents are least likely to have off-street parking and most likely to face a significantly higher charging cost. They may find it difficult to charge on-street near their home, making some of them dependent on more expensive “on-the-go” charging stations.  

33. What role do you see local authorities playing in delivering the 2030 phase out target, particularly in relation to planning regulations, charge points and working with District Network Operators? How can government best support local authorities in their roles?

UK Power Networks supports the Government decision in its EV Strategy of March 2022 to make local authorities responsible for charge point provision in their areas. It is for them to determine the need for and adequacy of on-street charging provision and to monitor, in conjunction with the Department for Transport, the commercial supply of on-the-go facilities in their area.

UK Power Networks and other DNOs will both assess likely market evolution and continue to systematically engage with all local authorities when determining future demand scenarios and network plans. Through our CLEO project[19] we are offering tailored support to each local authority. A new interactive tool enables them to optimise the location of charge points.

Government also needs to continue to regulate energy network operators so that they deliver the necessary electricity infrastructure at lowest cost and in a timely way.