From the Transformation of Energy to the Transformation of Transport

The Paris Agreement signed by 195 countries at the 21^st Conference of the Parties meeting in 2015 marked a significant and critical milestone in the global effort to combat climate change. Already, many countries around the world are making significant advances on their pathways towards clean and sustainable economies. In particular, the decarbonisation of the energy system has gained a momentum due to soaring deployment of solar and wind energy, even in the context of a global glut of low cost fossil fuels.

The price of solar PVs has declined by 80% since 2008, largely thanks to German energy policy that unleashed the Energiewende and China’s low-cost PV production that helped meet its demand. At present, Europe’s growth in solar PV deployment is being led by the UK with United States and China at the forefront in solar PV installations in the Americas and Asia.

Wind energy has also demonstrated an impressive learning curve as continuing technological improvements and new innovations have increased performance, efficiency and reliability via higher hub heights and larger turbine rotors (resulting in larger swept areas), better wind turbine control systems and remote monitoring. Onshore wind has already reached grid parity in numerous countries across the world as the levelised cost of energy has seen a 40% decline (on average) in the last ten years, while auction price for offshore wind in the UK has been halved since 2015. Furthermore, a successful deployment of of floating wind turbines could become a game changer for the sector as Statoil is currently piloting the world’s first floating wind park (Hywind) off the shores of Scotland.

However, until recently much of the fight against climate change has focused on the decarbonisation of the energy system, and while the energy sector accounts for the largest share of anthropogenic greenhouse gas emissions globally (approx. 35%), the transportation, manufacturing and agricultural industries have received only a fraction of the attention although they account for more than twofold of the energy sector’s GHG emissions combined. Fortunately, the low carbon agenda has begun to expand into the other sectors. For instance, in  the last couple of years a growing body of countries around the world have set themselves ambitious goals to phase out  internal combustion engine vehicles over the next few decades in effort to decarbonise the transportation sector. Both UK and France committed earlier this year to phase out the sales of all diesel and petrol cars and vans by 2040, whereas Netherlands and India have decided to restrict all car sales to electric-only vehicles by 2025 and 2030, respectively. Similar policy targets are being considered by California and China at present.

In the UK, the decarbonisation of the transportation has not only become one of the major backbones of the Government’s Clean Growth Strategy but also a core component of it’s wider Industrial Strategy. The UK Government had already set out £600million investment in EVs in 2015-20, together with an additional £500million for advanced propulsion centre, £246million investment in energy storage technology (including the £65million Faraday Research Institute), as well as £100million tax incentives. In the Clean Growth Strategy, the Government committed (among other things) to invest £1billion to support the uptake of ultra low emission vehicles, develop one of the world’s leading EV charging networks, invest approximately £165million to accelerate the uptake of low emission taxis and buses, and set out plans for the public sector to take a leadership role in transitioning to zero emission vehicles. As such, the electrification of transportation will be a focal area for the UK’s climate agenda in the years to come. In spite of ambitious plans for the electrification of transportation by the UK Government and other governments across the world, there are serious and significant barriers that need to be overcome to ensure that the grid-vehicle integration will be successful. For instance, this will require greater interplay between the automotive industry and the electricity sector which have operated independently of each other for decades and have historically worked at different speeds when it comes to business model development. In addition, distribution network operators will need to innovate themselves out of a legacy of centralised generation into a new role as a system operator as they to manage a cohort of assets that are becoming rapidly more distributed and decentralised.

Site visit in Oslo during the UK-NO Electrification of Transport Bilateral Roundtable

In the last few years, Norway has positioned itself at the forefront of the EV transition with a policy target aimed to end all sales of internal combustion engine vehicles by 2025 and a EV market share of 30% in the country. While Norway benefits from a strong and reliable energy system based on hydropower and therefore relatively well placed for this undertaking, the country has a unique insight into the many common challenges that lie ahead for countries which have moved onto the path of greening its transport sector via electrification.   Earlier this year, SIN Nordic teamed up with Innovate UK (UK’s main agency for funding innovation) to bring a small delegation of key EV stakeholder specialists from the UK to Oslo to engage in knowledge exchange with their Norwegian counterparts. The bilateral meeting touched on a wide range of issues from smart charging infrastructure and grid impact, to business models, Vehicle-to-Grid (V2G) and public (and customer) engagement – an informal meeting report can be found here.

One of the focal points of the meeting was on the importance to gain a better understanding of the values and ways of implementing time-of-use (ToU) tariffs and/or supplier-managed charging to deter homogenous charging behaviour among EV customers that could exacerbate existing peak electricity demand and thus compromise load management on the grid. Even in places where diversity in the population would ensure a greater spread in EV charging behaviour, a pricing signal would still be highly important in the context of V2G. There was a strong recognition across the board on the paramount role of digitalisation of the grid to provide network visibility for grid management that until recently did not exist. For example, real-time big data analytics will enable distribution network operators/distribution system operators to better forecast load demand and pinch points and to better access/use of flexibility assets (be it demand-side response, storage or back-up generation), which in turn, will result in greater system reliability and reduced grid investments. In other words, digitalisation will be pivotal to make the grid smarter. Another interesting issue discussed relates to the importance to develop the required infrastructure (i.e. cables) to ensure sufficient capacity, not only to meet EV charging demand, but to provide maximum flexibility that could enable demand side response more efficiently and load manage against neighbouring assets (e.g. in office and apartment buildings) or for V2G. Other key issues discussed included public engagement and opportunities for second-life batteries.

The challenge of transforming our current economic system to a one that is low (and eventually, zero) carbon is too great for any single country to tackle individually and will therefore rely on international collaboration to advance low carbon innovation (both development and deployment) and to reduce cost. Such cooperation will help catalyse much needed pilot and demonstration projects (particularly on live grid), test grid intelligence and integration (including business models) in a decentralised system, as well as establish common technological standards and regulatory alignment. The UK Science & Innovation Network is ready to help initiate and support such knowledge exchange and technological transfer.