On Wednesday 10 January the government published its Automotive Sector Deal, which established its industrial strategy across the automotive sector.
A key focus of this 'landmark' deal will be to strengthen the partnership between government and industry, and accelerate enhancements in emerging technologies as well as positioning the UK as a global leader in meeting challenges around the future of mobility and sustainability.
We consider the regulatory and operational opportunities and challenges these latest pledges will create for both the automotive and energy industries and the potential for fundamental changes to the relationships that currently exist between them.
An earlier government publication, the Industrial Strategy White Paper has helped herald these changes by identifying clean growth and the future of mobility as two of the four 'Great Challenges' facing the UK economy. Only recently, the chief executive of ABB, the world's largest supplier of fast-charging points, has said that the UK should 'accelerate its preparations for the rise of electric vehicles'. This, he claims, is on the back of 'a flood of consumer take-up of plug-in cars'. He has also warned that failure to develop the infrastructure required to support electric vehicles (EVs) will see the excellent technological developments that are taking place thwarted by a lack of charging points. It is therefore encouraging to see the government fund the infrastructure required cater for electric vehicles. This will help start-ups and established businesses involved in the development of cutting edge technologies raise additional capital. Currently, they are faced with the challenge of convincing investors to take both the 'technology risk' (i.e. will their technology work) and the 'market risk' (i.e. will consumers adopt EVs if the infrastructure is sub-optimal). Seeing the government take the lead in instigating the requisite infrastructure will mitigate the market risk. However, the next step for the government will be to ensure some shared standards between charging points so they are compatible with all makes of vehicle.
Given that electric cars have been forecast to add approximately 18 gigawatts of power demand to the grid, the equivalent of six Hinckley Point C nuclear power stations the government's pledge to spend £400m on the UK's charging point network, needs to be matched by efforts to improve the power grid so it is ready to meet the increased demand. National Grid has warned that if electric vehicles are not charged smartly to avoid peaks and troughs in power demand, peak demand could be as much as 8GW higher in 2030 and the grid as it stands, would struggle to cope.
Working in a unified and combined manner across all government and commercial parties is essential to making the most of this latest investment. Clean air targets must be matched with a concrete commitment to both create and maintain the requisite infrastructure to a unified standard and develop a business model for smart charging which works for both consumer and energy provider.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
