2pm Monday

1st March 2010

“Investing for low/zero carbon electricity”

& potential attraction of electric vehicles from a grid perspective

by Steve Argent of Arup Energy

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 Outline

Introduction and Arup

The Challenge
• Aim for zero carbon electricity + Energy Gap = Major investment need
• Price volatility - Need for future storage and demand side management

Government aspirations and policy ~~~> delivery?

• Are the current policies and market fit for purpose?
• Answer is NO – Ofgem recommends a range of changes.

Potential grid benefits of “smart” electric vehicle charging

• Context UK electricity grid + vehicles + Peak Oil
• Arup/Cenex Report on electric vehicles
• Technologies
• Potential impacts on UK Grid System
• Need for smart charging and dynamic pricing

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 Steve Argent Senior Consultant
BSc(Hons), CEng, FIET, MIAM, Eur-Ing

Over 35 years experience within the energy industry

• including project development, due diligence, environmental
assessment and consents, energy regulation and strategy, security of
supply and emergency planning.
Joined Arup in April 2008
• Recent work for clients has included carbon capture and storage, grid
connection applications for new nuclear developments, technical due
diligence of a power station and transmission network in Europe, plus
advising Government on grid aspects of electric vehicles.
Previously 6 years as Technical Adviser for British Energy Regulator, Ofgem.
In the 90’s, responsible for managing environmental assessments and negotiating
planning consents for multi-million pound energy projects.
• Involved in consultancy, project development and power plant
acquisitions in Australasia, Middle East and Europe, becoming
Powergen International's engineering development manager
Early career in power stations, grid control, operations and planning.

3 steve.argent@arup.com
 Arup
the creative force behind many of the world's most innovative projects

founded in 1946
employee owned
~10,000 staff
Americas Europe East Asia Australasia ~ £700M turnover

Including 20 offices in UK and Ireland

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Broad range of expertise
- including ENERGY and TRANSPORT

Major Procurement Risk

Projects Strategy Management

Environmental Performance Transaction

Assessment & enhancement Advice
Management

Planning Policy Asset Security

And Consents Management Consulting

Contaminated Transport Development and

Land Remediation & Logistics Regeneration

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 Plus related/supporting Specialist Technical Services

Civil Road/Rail Marine

Engineering Engineering Engineering

Structural Geotechnics Fire

Engineering Geology Engineering

Mechanical Seismic IT &

and Electrical Engineering Communications

Tunnelling Innovation &

Oil & Gas
Technology

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 Arup also a member of ITPOES - the UK
Industry Taskforce on Peak Oil and Energy Security
(+ Foster + Partners, Scottish and Southern Energy, Solar Century, Stagecoach Group and Virgin Group. )

7 http://peakoiltaskforce.net/download-the-report/2010-peak-oil-report/
 The Challenges
Decarbonising electricity
Decarbonising transport
Security and Affordability

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 UK Electricity ENERGY JUNCTION

– Drivers and opportunities Affordability

Political drivers Low

Security Carbon
• CO2, security, cost (fuel poverty)
• EU policy Steve Argent

• Political change – possible new emission limits

“Energy Gap” – huge investment required

• nuclear closures plus impact of LCPD (2008) and IED (2016)
• new generation build (gas, coal, nuclear, renewables)
• not forgetting networks

Regulation, Markets and “Incentives” (are they effective?)

• Carbon price, subsidies (e.g. ROC)
• Does market incentivise security/flexibility?

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 Major challenge to meet UK GHG Emissions targets

?
Reduction since 1990 mainly
due to “dash for gas”

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 UK Energy Markets
Outlook 2009 plus
Ofgem Project Discovery

www.ofgem.gov.uk/Markets/WhlMkts/Discovery/Pages/ProjectDiscovery.aspx

www.decc.gov.uk/en/content/cms/what_we_do/uk_supply/markets/outlook/outlook.aspx

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UK Electricity generating UK electricity generated in 2008
capacity by technology
in 2008

?
LCPD
closures
by 2015

in next
5-10 years

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 Shrinking existing capacity

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 Uncertain demand and
future generation mix

Peak Electricity Demand (source National Grid) Generation mix in 2020 - by scenario

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 Possible New build UK electricity generating capacity.
Source: Redpoint analysis for response to CCS consultation

Equivalent to two
thirds of existing
capacity

At a rate of approx
2 GW per year

Which may pose

challenges for both
skills and supply
chain

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 Increasing Price Volatility in Future
Greater variations in electricity prices predicted
• as a result of the increasing amount of [high capital cost] generating
capacity with low running costs
• but with increasing running cost of conventional plant

May bring forward the development of innovative .. arbitraging

between high and low price periods.
• “dynamic demand management” and electricity storage
• The future widespread use of electric vehicles could provide
distributed energy storage capacity and could potentially improve
the efficiency by smoothing power demand between day and night.

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 For Green Scenarios
Project Discovery
• With high wind/renewables, the GB system
will increasingly rely on CCGTs to operate
flexibly (and at lower annual load factor) in the
future

• For CCGTs running at low load factor to

remain profitable, prices would need to be
allowed to peak to high levels during periods
of low wind output

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Poyry Report
– July 2009

How wind
variability
could
change the
shape of UK
and Irish
electricity
markets

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 Coal CCS new build
Cars plug in hybrid Power plant
Biomass co-firing
Nuclear
Low penetration
Wind

Cars full hybrid

Context

Global car fleet predicted to triple by 2050

Can this be reconciled with ambitious CO2 reduction?

Impacts of vehicle charging on the electric grid?
Arup/Cenex study for BERR plus recent Element Energy Report
Future electric vehicle scenarios for UK

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 So – what’s the solution?
and will the current market deliver it?

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 Possible new generation
some more ‘low carbon’ than others

Nuclear Coal Hydro/storage Gas CCGT Onshore Wind Biomass

So what
drives
choice?
Wave Tidal Solar/CSP Offshore Wind

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 Capex or unit price as drivers of generation choice?

“wholesale”

Source: PB Power Power to the Nation 2006 Source: Ofgem Discovery 2009

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Factors which drive electricity generation investment
Not just unit cost estimates (levelised £/MWh) which used to drive
nationalised industry investment.
Now more complex as it requires a view on future costs, cashflow,
risks and uncertainty.
• Government employ regulations and incentives to steer market
outcome, but even generous incentives may not always deliver as
expected.

• Price fixer or taker?

• Capex-Opex balance?
• Future price volatility?
• Future carbon price/incentives?
• Exchange rates?

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 UK energy policy is no longer fit for purpose
Overview
• Existing nuclear power assets in the UK are fraught with
performance failures and new nuclear is unlikely before 2020
• Much needed new coal build is politically and environmentally
unpopular and challenged by environmental regulations
• UK renewables ambitions will be very costly, will not be met, will
not alleviate climate change and may reduce security of supply
• The UK will grow dependant on gas, gas and more gas as it fills
the energy gap and backs up intermittent wind to 2020
• The recession will ease power demand and carbon emissions, but
will also delay investment in Britain’s energy infrastructure

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 Ofgem Project Discovery
findings so far
• High levels of investment are likely to be needed – up to £200 billion
may be required by 2020.
• more than doubling the recent rate of investment.

• Consumer bills rise in all scenarios.

• Elec Bills may increase between 32% and 53% in next decade
• BUT as Ofgem assumes energy efficiency will reduce energy use,
Elec Prices go up slightly more (by 33 to 54%)

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 Ofgem Project Discovery conclusions
• Ofgem doubts that the current market will deliver
secure and sustainable energy supplies
• Ofgem recommends far reaching market reforms
(and prompt action)

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 Are Electric Vehicles part of the solution?
Global Emissions by sector

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 Cenex / ARUP report for DfT and BERR in 2008

Considered electrification of transport in UK to 2030.

Key findings:

• EVs can save 40% CO2 with current

UK grid mix

• By 2020, if incentivised by government,

• 1.0-1.5m EVs and PHEVs
• 2m Tonnes CO2 saving / year
• Reduce UK road transport
emissions by 2%

• By 2030,
• 4m EVs and PHEVs
• 9m Tonnes CO2 saving / year
• Reduce UK road transport
emissions by 9%

28 www.berr.gov.uk/files/file48653.pdf
 Energy and propulsion alternatives are many.
Arup Cenex study focussed on EV and PHEV

Energy Resources Energy Carriers Propulsion Systems

Oil Liquid Conventional ICE:
Fuels Petrol / Diesel

Coal Gaseous ICE

Gaseous
Fuels ICE Hybrid

Electrification
Natural Gas

Battery
Plug-
Plug-In Hybrid PHEV
Biomass
Electricity

Other Renewables Electric Vehicle

(Solar, Wind, Hydro) Electric Vehicle

Nuclear Hydrogen Fuel-

Fuel-Cell Electric

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 Approximate differences in efficiency

100 ICV
20

45 35
50
100 EV

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 Electrification of Transport
Overview
The Arup/Cenex study examined a number of factors which will influence the
development, uptake and impact of pure electric vehicles and plug-in hybrid
vehicles within the UK.

The following were considered:

• Possible scenarios for the uptake of these vehicles

• Comparison of the life cycle emissions and environmental impacts of these
vehicles with petrol/diesel vehicles
• Battery technologies for electric vehicles
• The impact of these vehicles upon the UK electricity grid
• Opportunities to develop UK business in support of vehicle development
• Barriers to be overcome and incentives required to stimulate the market
• Demonstration projects to test and further understand the issues surrounding
the mass introduction of these vehicles.
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 Uptake Scenarios

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 Electric Vehicle – Grid Issues

Before considering the grid impacts of electric vehicle charging, necessary to consider how
the grid system operates and variations in national electricity demand that currently occur.

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 Daily Electricity Demand Variation Profiles

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 Incentives for a flatter demand profile
• Prices in the [current] wholesale electricity market vary by the half hour to
reflect the varying cost of generation, incentivising extra generation at
peak and encouraging more demand overnight. Balancing market shows
variations from £40 to £120 per MWh within a day.
• Most domestic customers currently pay for their electricity based on a
standard (single) tariff rate (Only some domestic/smaller comercial
customers have dual rate tariffs with lower overnight tariff + higher
daytime tariff.)
• In future, as renewables impose additional variability on other generation,
more advanced tariffs may be used (via smart meters) to encourage
demand when generation is available.
• Of course this may no longer be solely overnight, depending on wind
conditions etc.

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 Demand response

Cost premium for

more complex
controls etc

Flat single tariff price: Dynamic prices:

No incentive for Demand encouraged to move
demand response to periods with lower prices

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 “Reserve” frequency response possibilities

The frequency is the same in the
whole interconnected GB
power system,
A chip of the size of a credit card
can measure frequency and
disconnect load in milliseconds –
far faster than production can be
increased
No communication is needed
Technology already being tested on
domestic appliances (“grid
friendly” fridges)

Scope for applying similar technology to vehicle chargers

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 EV Charging demand assumed in Arup study

The total demand from all vehicles with the ability to connect to the
grid is shown in the following chart.

per year 2010 2020 2030

GWh % of GWh % of GWh % of

NEP NEP NEP

BaU Total Demand 13 .003 1,800 .5 6,000 1.5

Mid Range total demand 13 .003 3,500 1.0 15,600 4.0

Extreme total demand 13 .003 7,600 2.1 28,400 7.3

NEP = GB National Electricity Production (UK less NI)

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 Importance of “incentivised” EV charging
• Assuming that charging demand is chiefly targeted at periods with
‘surplus’ generation – i.e. off peak or when wind output exceeds average
- sufficient generation capacity to cope with the projected EV demand
overall in the 2010 and 2020 scenarios.
• National transmission networks should also be sufficient
• any problems of supply should be restricted to pockets within local
distribution systems, especially in cities with high growth in electric car
usage
• A localised high density of plug in EVs has the potential to disrupt the local
distribution system where they charge up, but this would depend on how
clustered the charging points were geographically and the size and timing
of charging demand compared to the load profile for that area.
• As EV charging demand increases (e.g. 2030) - clustering and timing
become more sensitive,

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 Current Electric Vehicle developments
• Further report for Government by Element Energy
• Charging practicalities
• Arup managing user trials of Electric Vehicles in the Midlands
• Smart charging as part of wider Smart Grid initiatives

11 February 2010 government announcement

• The Midlands has been designated a new Low Carbon Economic Area
(LCEA) and has won £19million of government funding for research
into and development of low carbon vehicles.
• Key stakeholders in the Midlands LCEA include Advantage West Midlands
(AWM), East Midlands Development Agency (EMDA) centre of excellence
for low carbon and fuel cell technologies (CENEX), Technology Strategy
Board (TSB), Jaguar Land Rover (JLS), Toyota, Tata Motors, Mitsubishi
SAIC and the Universities of Birmingham, Coventry, Warwick and
Loughborough

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 Greater CO2 savings by
charging overnight

Element Energy 2009, Strategies for the uptake of electric vehicles and associated infrastructure implications, Final Report for Committee
on Climate Change, http://hmccc.s3.amazonaws.com/Element_Energy_EV_infrastructure_report_for_CCC_2009_final.pdf.

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 Electric: Public Charging Points

Many practical issues still to be resolved:

• Who owns the charging points?
• Who owns the Cable? (and safety)
• Billing
• Street Clutter
• Charging at place of work

Arup now investigating inductive charging

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 CABLED – West Midlands Low Emission Demonstrator Programme

Arup led the West Midlands bid to the Technology Strategy Board’s
competition for Ultra Low Carbon Demonstrator Vehicles

• Consortium of 13 organisations
• Arup as Project Managers
• 6 vehicle manufacturers
• E.ON – electricity supplier
• Birmingham City Council
• Coventry City Council
• 3 universities
• Aston
• Birmingham
• Coventry

• Additional funding from AWM

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 CABLED – West Midlands Low Emission Demonstrator Programme

110 vehicles from 6 different manufacturers including full electric,

hybrid and hydrogen fuel-cell vehicles

40 smart fortwo electric drive 25 Mitsubishi i MiEV 25 Tata Indica Vista EV

10 micro:cab urban car 5 Landrover Range-e 5 LTI electric TX4

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 CABLED – West Midlands Low Emission Demonstrator Programme

Users selected to give a wide socio-economic background, and a

range of car usage

• 12 month trial
• 1st vehicles on roads in December 2009
• Remainder through 2010

• Charging points installed at homes

• Charging points installed at workplaces
• 36 public charging points to be located in
Birmingham and Coventry

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Case Study CABLED – West Midlands Low Emission Demonstrator Programme

Four major objectives from the trial

• Vehicle development

• User perception

• Demonstrate UK technology

• How much infrastructure?

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 Smartgrid – Energy Networks Strategy Group

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 To Conclude:
Advantages of “incentivised” vehicle charging
• Charging EVs in off peak periods, particularly at night [or when
wind output is high] is an efficient use of the generating sector and by
flattening the daily demand profile will improve generation
efficiency.
• Day or peak charging is less desirable.
• Network charges mainly relate to maximum demand
• So unit cost to all consumers may reduce slightly as relatively fixed
network costs are divided by a greater number of total units.
• “Smart Charging” could provide effective ‘fast reserve’
• National Grid currently pays £220M per year for fast reserve
• E.g. ability to switch off Dinorwig pumping overnight
• “smart charging” could significantly reduce charging cost
• Initial estimate <1p/mile - compared to 3p/mile (elec) or 10p/mile (diesel)

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We only have one planet…

For further information, please contact:

Steve Argent - Arup Energy
Arup Campus
Blythe Valley Business Park
Solihull, West Midlands B90 8AE steve.argent@arup.com
Tel: +44 121 213 3868
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