Humans’ need for speed might be our undoing. Road vehicles - cars, motorbikes, trucks and buses - account for nearly 25 percent of global carbon emissions. Modern life may have made us all dependent on modern transport methods to get ourselves and the things we use from A to B and back again, but we can’t continue to rely on fossil-fuelled vehicles if we want to keep living.
While improved vehicle efficiency and greater use of biofuels will play a part in reducing global transport emissions, electrification will be the true game-changer. Here’s how EVs and increased e-mobility can speed up the journey to decarbonisation - and what energy retailers need to do to get on board.
The road to E-mobility
Electric vehicles - those powered by electrically charged batteries or a combination of batteries and conventional engines - are helping us shift gears. While they’re widely seen as a solution to solving at least some of the world’s carbon emission issues, their popularity and availability waxes and wanes all over the globe. In Norway, for example, 75% of all new vehicles bought in 2020 were electric. In Iceland, nearly 50% of vehicles purchased were EVs. In China, that figure dropped to 5.7% and in the US, it was just 2%. After a slow start (about 10% of vehicles in Europe and the UK are electric); the EV movement is gaining momentum in the UK - nearly 15% of all vehicles registered in the UK in May 2021 were electric. In New Zealand and Australia, uptake so far has been minimal: in late 2019, there were just 17,505 EVs on New Zealand roads out of a total four million vehicles. In Australia, just 20,000 EVs were sold between 2011 and 2021.
While such slow uptake in Australia has prompted concerns that it could become a scrap heap for petrol and diesel-powered vehicles rendered obsolete elsewhere, there are hopeful signs of change. Dramatic increase in consumer demand - 8688 battery and plug-in EVs were sold in Australia in the first half of 2021, more than in any other calendar year - shows that the ‘lucky country’ is starting to wake up to the possibilities offered by electrification. Most major car brands are now producing EVs, so the vehicles are becoming cheaper and easier to run. They’re also being hailed as a huge source of clean energy: thanks to vehicle-to-grid charging (V2G), EVs can enable ordinary Australians to feed back to the grid and power their homes.
How do V2G and V2H work?
Like other forms of DER, V2G charging can add extra security to the grid by providing an additional source. The electrons from an EV fleet provide the scale to create a Virtual Power Plant (VPP), in collaboration with an energy retailer or other market participant. If they can manage and bill the sources correctly, retailers can use V2G to extract power that can be on-sold to others. Similarly, bi-directional charging technology used in Vehicle to Home charging (V2H) allows homeowners to use their EV battery to power their home as well as send energy back to the grid.
Done well, V2G has the potential to turn transport fleets into significant energy assets, enabling consumers to power their homes and businesses through their transport choices. But we’re a little way off achieving that yet. Not all EVs are V2G compatible yet (all EVs will be V2G-ready by 2025). No country has adopted V2G or V2H at scale either, though trials are ongoing in the UK and the Australian Renewable Energy Agency (ARENA) is funding major projects examining V2G and smart charging (charging EVs during off-peak hours). The cost of V2H bi-directional chargers (about AU$10,000, or ten times that of an ordinary one-way home electric charger) is currently prohibitive for many users, but these costs are expected to come down over time.
Harnessing the power of batteries on wheels
Massive growth and capability of distributed energy resources (DER) like rooftop solar (already installed in nearly three million homes), battery storage and virtual power plants (VPPs) has proved a huge appetite and need for decarbonised energy sources. Adding EVs to the mix will strengthen the power of DER even further - if even half Australia’s current 20 million-strong fleet of registered vehicles switched to EVs, that’s a lot of potential batteries!
That said, even if most forms of transport do become electrified, EVs can’t speed up the path to decarbonisation on their own. Successful, meaningful EV uptake requires a cocktail of components, including governmental and regulatory support, public appetite for change, future-proofed infrastructure and smart software. With the right software, energy retailers can use EV charging to balance supply and demand, optimising grid performance in a similar way as other DER. With a more flexible grid, energy retailers can better manage network congestion, reduce grid stabilisation costs and optimise wholesale/retail portfolio spend.
Energy retailers need a fair amount of metaphorical gas in the tank to keep pace with this rapidly evolving race and support the growth of more sustainable and resilient forms of energy. We’ve already seen some energy retailers struggle to manage and bill home solar and other DER, so some clever thinking will be needed to avoid the same mistakes being made again. Investing in supporting infrastructure and seizing the opportunity to embed software that will deliver benefits to businesses and consumers alike will go a long way towards protecting the future.