This report outlines the potential benefits of smart charging, whereby electric vehicle charging is managed in response to the needs of the energy system and vehicle users, and provides recommendations for how policymakers can ensure smart charging technologies are adopted and their benefits are realized.
The report concludes with the following summary and recommendations for policymakers.
Smart charging will be effective in offsetting, potentially completely, the significant power system costs of passive charging of EVs. The rapid uptake of electric vehicles (EVs) combined with passive charging will add significant costs to the electricity system, requiring increased peak generating capacity, network capacity expansion, and use of inefficient peaking plants that drive up CO2 and energy costs to customers. For example, UK electricity whole system costs could increase by almost ‚€1 billion/year due to passive charging of EVs by 2040, of which distribution network upgrades alone could account for €400 million/year. In California, distribution network upgrade costs are projected to increase by $140 million/year through 2030 with passive charging. Even at high levels of EV deployment, smart charging can substantially avoid these challenges, reducing energy costs for consumers and the grid‚Äôs carbon intensity.
Policymakers must start planning for the impacts of EV roll-out on the power system, quantifying the expected EV uptake and whole system implications of passive versus smart charging. The public sector needs to work with stakeholders, e.g. System Operators (SOs) and Distribution Utilities, to develop an agreed vision for EV deployment that meets carbon ambitions and use this to assess the power system impact in the near and long term.
Smart charging can generate several diverse benefits for a decarbonised power system. The inherent flexibility of EV charging means there is a significant upside to smart charging, particularly in a decarbonising power system. Smart charging can reduce curtailment of renewable energy, reduce network constraints, and provide valuable ancillary services to the System Operator. In addition, vehicle-to-grid capabilities could replace peaking generation plant. These benefits may be aligned across the system, but different implementations of smart charging can concentrate benefits in one part of the system. For example, a simple static time of use tariff can shift EV charging away from peak demand, to limit network congestion and avoid or delay network reinforcement. An alternative tariff might encourage charging load to absorb otherwise-curtailed solar photovoltaic (PV) electricity, yet this may require increased network capacity. Coordination will be required to ensure smart charging achieves the greatest system benefit. Policymakers should determine which problem is most acute in their region and ensure that smart charging solutions have appropriate capabilities, supportive regulation and commercial models that can monetise value from appropriate parts of the power system.
Smart charging is a system solution that requires diverse actors to work together with unprecedented coordination. Effective smart charging requires unprecedented coordination of multiple stakeholders across the power system and automotive sectors. While some benefits can be generated with very limited sharing of data, further system benefits can be realised the more data is shared (such as location data for distribution networks, temporal data for renewables-responsive operation, and EV and trip data to account for consumer needs). It is not yet clear which value chains will deliver best value for the system and energy customer, how to coordinate benefits across the system, and what the regulatory impact will be. In this nascent sector, it will be necessary to encourage continued innovation through trials and financial support. These should encourage multiple stakeholders to work together to deliver system benefits; to identify the data that must be generated and shared to achieve this, and how these benefits can be realised for the minimum cost. An example is the Green Deal funding for infrastructure in the Netherlands, which required data sharing collaboration amongst partners; now the Dutch have the most developed public charging infrastructure in Europe. Policy makers should also review existing regulation and standards to ensure that the necessary data can be generated and shared in an open and secure manner.
Smart charging can be accelerated through an appropriate combination of market incentives and regulation. Market mechanisms can be simple to implement, but may only recognise operational benefits of smart charging. For example, tariffs have long been used by the power sector to shape electricity use. Regulation in this sector has delivered significant benefits for customers, for example, the use of diversity factors in estimating shared network costs significantly reduces connection cost for customers while still providing high capacity access per customer. Regulation may need to be updated to reflect the benefits of smart charging and its value to each part of the energy system, particularly with regards to avoiding capacity investments. Trials are required to increase confidence in the level of smart charging response to incentives. In the short term the public sector could trial and implement market mechanisms, including time-of-use tariffs e.g. Toronto’s Charge TO or New York’s SmartCharge; or reward systems, e.g. California’s ChargeForward or Netherland’s Jedlix, to spur innovation, to quantify level of response and measure system impact. Trials could ensure consumers who continue to charge passively do not see an increase in electricity prices. They could also review how existing regulation and legislation (VAT, tariffs, grid costs) are aligned to the market mechanisms and policy aims, e.g. UK & Netherland’s review of double-taxing electricity storage. In the longer term, it may be beneficial to regulate a minimum level of smart charging to ensure the growing costs of passive charging are not paid by all. This minimum level will be specific to the problems identified in that region.
Strategic infrastructure investments and learning by doing can spur innovation and expand methods of smart charging. Smart charging needs to be deployed rapidly, but there will be continued innovation in how smart charging is provided. Public sector support of trials should allow exploration of different technologies, business models, and data sharing arrangements. Information on costs and system value should be more widely shared. Regulatory impacts should be explored as these can unlock key elements of system value. Policymakers should also consider how to ensure interoperability of hardware to provide industry certainty of their investments, access to data and ease for consumers, while still allowing room for innovation. This could be achieved through regulating smart charging capability (e.g. through standards) rather than specific charging technology and ensuring that regulation allows EVs to participate in the energy markets, including Distribution System Operator (DSO) flexibility and ancillary services.