At an FSR Regulatory Policy Workshop this month, jointly organised by the transport and energy colleagues, we learned that the electric vehicle business is growing faster than anyone expected a few years ago. About 0,2% of all cars are electric in Europe today, but the experts agree that we are getting close to the tipping point.
Question is who will invest in the charging infrastructure?
Chicken or the egg
My five year old son recently came up with his own version of the chicken or the egg problem when he asked me: “Papo,[1] we need seeds to grow trees and we need trees to grow seeds, so how is that possible?” Same is true for electric vehicles. If there are no charging stations, people won’t buy electric vehicles, but who will invest in charging stations before we start buying electric vehicles? As electric vehicles are key to decarbonise the transport industry, we need to get out of this impasse.
Alternative Fuels or Clean Energy
In some countries, the chicken and the egg problem has been solved by allowing Distribution System Operators (DSOs) to kick-start the market. They then include the charging stations in their regulated asset base so that the costs are socialised over all distribution grid clients. Note that it was one of the grey areas in the regulation of emerging businesses related to distribution grids that we analysed in a recent FSR policy brief.
Meanwhile both DG Move and DG Energy at the European Commission came up with new legislative proposals, i.e. the Alternative Fuels Directive (already adopted), and the Electricity Market Directive (one of the proposal included in the EU Clean Energy package), respectively. They clearly favour a market based investment in charging stations, while they also leave a small opening for DSO involvement under strict conditions. The EU too is also stepping up the pace of developing charging standards and interoperability rules.
Battery on wheels or transportation solution
At electricity industry gatherings, electric vehicles are sometimes (mis)represented as “battery on wheels” that will provide the flexibility that we need in a renewable based power system. Indeed, in today’s world most people that use a car also own it. This means that our cars are parked for most of the time, either at home or at work (studies cite cars sitting idle for 90-95%). If we would convert to electric vehicles and connect them to the grid when they are parked, they would become batteries on wheels that the system can tap into when the wind does not blow or the sun does not shine.
However, the transport solutions of the future are likely to move away from car ownership towards car sharing and renting services, and also towards autonomous driving. As a result, electric vehicles might be in use at most times, and require fast charging either when they are parked for a short time, or be charged while being driven, if they are not parked at all. To what extent they will be a versatile resource or a challenging customer to the electricity system remains to be seen.
[1] His way of combining the Italian babbo with the Belgian papa
Read the previous article: My take on TSO-DSO Coordination debate
