LEC0003

Written Evidence submitted by EDF

Memorandum by EDF in response to Parliament’s Public Accounts Committee Inquiry on Low Emission Cars

Introduction

EDF is the UK’s largest producer of low carbon electricity. We operate low carbon nuclear power stations and are building the first of a new generation of nuclear plants. We also have a large and growing portfolio of renewable generation, including onshore and offshore wind and solar generation, as well as coal and gas stations and energy storage. We have around five million electricity and gas customer accounts, including residential and business users. EDF aims to help Britain achieve net zero by building a smarter energy future that will support delivery of net zero carbon emissions, including through digital innovations and new customer offerings that encourage the transition to low carbon electric transport and heating.

In February 2020, EDF acquired a majority stake in Pod Point. The acquisition will help accelerate Pod Point’s activities and national roll-out of charging infrastructure across the UK. Pod Point is one of the UK's leading providers of electric vehicle charging. Since forming in 2009, Pod Point has manufactured and sold over 96,000 charging points across the UK and Norway and has also developed an extensive public network connecting EV drivers with 3,700+ charging bays at locations including Tesco, Lidl and Center Parcs.  Pod Point installs smart home charging points for customers of major automotive brands including Audi, Nissan, Volkswagen and Hyundai while Workplace and Fleet customers include companies like Skanska, Mitie and Pepsico.  Pod Point also works with property developers and managers like Barratt Homes, Savills and Bellway to wire up their developments. 

EDF also has other activities in the UK electric vehicles sector, seeking to provide integrated solutions for electric cars, charging infrastructure and electricity supply to both residential and business customers.  EDF is working with partners in a joint venture DREEV to develop vehicle-to-grid (V2G) solutions which aim to take advantage of the inherent bi-directional power market flexibility offered by EV batteries. In November 2019, EDF Renewables acquired Pivot Power which specialises in battery storage and power infrastructure for electric vehicle charging. Pivot Power has a nationwide portfolio of 40 sites which will be connected to the high-voltage transmission network and could provide up to 2GW of flexible storage capacity to integrate more renewable energy, provide power to locations for EV charging infrastructure and support the UK’s net zero commitment. 

EDF welcomes the opportunity to provide evidence to the PAC Inquiry on low emission cars and we set out our evidence in the section below.

Evidence

The Government’s EV policies, including the Plug-in Car Grant, Electric Vehicle Homecharge Scheme, Workplace Charging Scheme, On-street Residential Chargepoint Scheme and the company car tax regime have been very effective in increasing EV uptake and have contributed significantly to the growth of the EV market in the UK in recent years.

Moving consumers to new and unfamiliar technologies is a difficult task, especially when that new technology is more expensive in its early adopter phase. The combination of consumer incentives and regulations encouraging lower emission vehicles has been has proved to be a successful model in the UK that should be replicated for other technologies and sectors where less progress is currently being made (for example with respect to the decarbonisation of heat). To illustrate the success, EV and Plug-in-hybrid vehicle (PHEV) sales have grown in recent years from less than 2% of new car sales to more than 10% of the new car market in 2020.   We expect further growth in the market in 2021 and beyond.

As EVs become a mainstream feature of the car market, and costs continue to fall, it should be possible for government to withdraw many of its current support measures over coming years.  However, this should only be done gradually so that EV purchase remains attractive for consumers relative to conventionally fuelled petrol and diesel vehicles.  During the 2020’s a key challenge to overcome in order to continue to deliver rapidly rising growth in EV sales will be growth in public rapid charging, to address “range anxiety” and ensuring that drivers can use EVs confidently for the longest of journeys. However, the business case for private investment in rapid charging is currently challenging for the following reasons:

• Rapid 50kW or higher rated chargers are many times more expensive than the lower rated chargers typically installed in home, workplace or destination locations
• A large new connection to the transmission or distribution network will be needed for sites with a collection of rapid chargers and the costs of this, while different for each site, will in most cases be very substantial
• There are often land related costs and charges
• A 20% VAT rating for electricity sold commercially compared to 5% VAT on electricity consumed at home means electricity prices for public rapid charging will be significantly higher than for home charging – drivers who can charge at home will therefore be incentivised to do so whenever possible.
• Recovery of the up-front investment and future profitability of rapid charging infrastructure relies on charge event sales from rapid charging, plus potential revenues from associated services at the site (shops, cafes etc) - and is thus entirely linked to the level of utilisation of the site. Today, only a small minority of rapid EV charging sites have utilisation rates high enough to recover costs and make a return in a reasonable timeframe.

Therefore, the Government’s £1.3bn support package for rapid charging infrastructure is very welcome and we support the intentions to use the money to underpin large connection costs needed for significant rapid charger provision at Strategic Road Network locations. This funding has the potential to significantly accelerate the provision of EV rapid charging infrastructure and to bring forward the point at which more rapid charging sites become viable propositions – to the benefit of building on the Government’s current success in EV adoption, and EV driver experience.

We believe another important reason for the current good progress on EV targets is the simplicity for the consumer of the EV grant schemes. Companies apply to the relevant Government scheme for their products to be eligible for grant support and once approved, their offers to customers can be marketed with the grant included.  After sales/installation, companies complete all the administration and submit claims for the grants, a repeat process which can be accomplished efficiently by trained personnel and in bulk. This process means that necessary administrative processes and checks associated with the grant schemes are not a barrier to consumer adoption. 

We consider the design process used for EV grants should be a model for other areas such as future support for energy efficiency and heat pumps.  The well-publicised difficulties with the Green Homes Grant scheme are in our view at least in part related to the adoption of a much more complex two-step process where the consumer is required to complete much of the administration.  

Conclusion

To conclude, EDF considers that the Government should be commended for many of the policies and schemes which it has put in place to support the growth of the EV market.  Indeed, many of the approaches used for EVs provide examples which could usefully be applied to other sectors where there is a pressing need to encourage consumer adoption of lower carbon technology.  In particular, while the decarbonisation of heat is undoubtedly a much greater challenge, we believe the support mechanisms for EVs offer some examples of how to promote the large-scale consumer adoption of energy efficiency and lower carbon heating solutions.

March 2021