ClearGreen

“Breaking the unvirtuous cycle of ‘low demand-low investment’ requires government to kickstart and remain active stake holders in the new infrastructure to transition not leave this to private markets to sort out.”

Solving climate change requires the world to move away from fossil fuel energy use towards renewable energy sources such as solar, wind, water and biomass – an energy transition. The transition is not going to happen overnight because it involves transforming whole systems of goods and services. Systems markets can be defined as involving the production and use of compatible and complementary goods and services to yield benefits.

For example, a nut needs a bolt to be useful. A computer is more valuable when paired with a wide variety of affordable software. A payments systems relies on a comprehensive network of retail outlets that use this. In a similar sense, the EV transition requires both a wholesale switch away from petrol and diesel cars to electric ones, and a digital expanded electricity grid powered by wind and solar energy. This new system needs to be supported by a comprehensive nationwide, reliable public charging network to replace the existing network of petrol stations. The importance of public charging may seem obvious but it has been sorely neglected in the EV transition curtailing consumer enthusiasm for EVs. A different policy mindset is needed that focuses on the systems properties of the transition as a whole, encompassing charging and grid issues. This is gradually shifting but all too slowly.

On charging, there are an estimated 49,882 public charging devices available in the UK in September 2023 according to Zapmap. Many factors affect the size of the charging network necessary to support the transition such as geography and the extent of home charging. There are 18 fully electric EVs (BEVs) per public charging device in the UK – a better ratio than in the poster child of EV success, Norway, but then Norway has greater home charging capability.  More telling, fewer than one fifth of public chargers in the UK are rapid (25-99kW) or ultra-rapid (100kW+) devices, capable of delivering a charge of 100 miles in 30 to 60 and around 15 minutes. This is significantly lower than in Norway.

The Rapid Charging Fund (RCF) is intended to address this imbalance, by allocated £950 million to the rollout of rapid charging on major roads and the motorway network. It aims to have six rapid or ultra-rapid charging devices at all motorway service stations, and a minimum of two chargepoint providers to overcome competition concerns. This brings an end to the mantra that the public charging network can be left solely to private markets. But allocation of the RCF has been painfully slow and a pilot scheme for bids is yet to be launched. Meanwhile, less than a quarter of 119 motorway service stations have the target number of six rapid/ultra-rapid chargers with an average of just 3.4 each according to a recent RAC report.

If consumers don’t have faith in the public charging network, they will hold off buying an electric car. Survey evidence suggests that this is now a real hurdle for consumers. This affects the supply side as investors’ appetite to fund an expanded network will be low, which keeps the costs of public charging devices high as economies of scale from a larger network cannot be reaped. High costs and an inadequate network feed back into lower demand for electric cars as consumers postpone switching. This chicken-and-egg problem is common with new technology goods that form part of systems. Breaking the unvirtuous cycle of ‘low demand-low investment’ requires government to kickstart and remain active stake holders in the new infrastructure to transition not leave this to private markets to sort out.