Why the UK is beating the US on transportation electrification, Part 1: Customers first November 29, 2018 | By Erika Myers Editorial note: Erika Myers, Director of Research at the Smart Electric Power Alliance (SEPA), was part of the organization’s annual Executive Fact Finding Mission, which this year spent a week, Oct. 14-19, in the United Kingdom (U.K.). The following blog is the first in a two-part series examining the U.K.’s aggressive approach to transportation electrification. I’ll never forget the first time I rode in an electric vehicle (EV) — a Tesla Roadster at a 2010 ride-and-drive event in South Carolina. I became an instant convert, and now drive a Nissan LEAF. I recently had the chance to revisit that experience — during SEPA’s Fact Finding Mission to the U.K. — sitting in the backseat of Jaguar’s new iPace electric SUV. The older gentleman at the wheel, who was driving an EV for the first time, said he had owned a litany of different gasoline and diesel cars, but he was soon smiling broadly over the performance, speed and torque of this cleaner alternative. One of the ride-and-drive representatives from DriveElectric, a U.K.-based company that does pop-up EV events, adeptly walked him through the car’s features, and provided an overview of other available vehicles, charging options, incentives and maintenance requirements. At the end of the 15-minute drive, the customer admitted the Jaguar was beyond his price range, then immediately walked over to check out a lower-priced Hyundai Kona and to ask for leasing information. First-time EV driver during a ride-and-drive event at the 2018 Low Carbon Networks and Innovation Conference in Telford, England. (Photo by Erika H. Myers) Getting people behind the wheel of an EV is the quickest way to clear up any misconceptions they might have about driving these cars, said DriveElectric Director Mike Potter. “After a test drive, the number one comment is — ‘Oh, it’s just like a real car,’ he said. “Without showing people the product, it just won’t happen.” Even more important, Potter said, “EVs are the gateway drug for a greener lifestyle. Once they enter the sustainable thought space, [people] end up getting solar panels and batteries for their homes, and their relationship with energy changes.” Throughout the trip, as I compared the U.K. to our own states with the most progressive EV policies and programs, such as California, it became clear that Britain is ahead of the U.S. in transportation electrification because it has more clearly-defined, long-term goals. The U.K. sees the aggressive deployment of EVs as one of the key pillars of its current goal to reduce carbon dioxide emissions by 80 percent below 1990 levels by 2050. As part of that effort, in September 2017, the country adopted a bold policy to ban the sale of internal combustion engines (ICEs) by 2040. At the same time, the U.K. also released a comprehensive EV roadmap, The Road to Zero, and invested £1.5 billion ($191.5 billion) of government funds for EV research and innovation through 2020. More recently, a special committee appointed by Parliament released a report, Electric Vehicles: Driving the Transition, including recommendations to define more precise targets for zero emission vehicles and to move up the target date for the ICE ban from 2040 to 2032. According to the report, the “U.K. will need to match, or better, international commitments (to ban ICEs, as in Norway and France) if we are going to be a world leader.” Buying EVs made easy Meeting these ambitious targets will require a wave of EV deployment that will rely nearly 100-percent on consumer purchasing behaviors. The U.K. government offers a £4,500 ($5,800) rebate for full-electric models, an incentive that will continue through 2020. But incentives alone aren’t what closes the deal for potential EV drivers; as Potter said, most often, it’s driving the vehicles themselves. Thus, initial access to EVs is a major focus in the U.K., especially since the technology is still new and unfamiliar, and the vehicles are not always readily available to test drive. DriveElectric was founded to serve the needs of this growing market of the EV-curious. The company helps prospective EV drivers lease a full range of all-electric and plug-in hybrid electric cars, from the practical, such as the Kia Soul EV, to Tesla’s highest end luxury models. In addition to being a one-stop shop for EV leases, DriveElectric also helps customers find and install EV charging units, helps fleet managers procure large numbers of vehicles and provides ride-and-drive services for events around the country. In Potter’s view, automotive manufacturers have yet to develop a good sales channel for EVs. DriveElectric learned a lot about EV education through a large U.K.-funded EV pilot program called, My Electric Avenue. The program examined the effects of EV clustering — that is, the impacts on the grid if several EVs in one neighborhood all start charging around the same time. It also revealed the efficacy of ground-up or micro-marketing — simply put, bringing the EVs to the customers. After accidentally missing an appointment with a potential EV lessee, DriveElectric staff took a car to the woman’s home for a test drive. The customer invited many of her neighbors to try out the car as well, and at the end of two hours, the DriveElectric crew were fielding questions about EVs from 20 people crammed into the woman’s kitchen. Since that experience, DriveElectric provides home and workplace pop-up test driving events. About 12 percent of the people who make an inquiry through the company’s website end up leasing a car, Potter said. DriveElectric’s brand-neutral and customer-first approach makes its leasing program as simple as possible. The entire process can be done online, and customers can have their new EV delivered directly to their homes. Additionally, the cost of the charging unit and installation are rolled into the lease. Potter emphasized that DriveElectric’s success depends largely on being a trusted resource. Staff work one-on-one with drivers to help them select a car that best fits their needs. For customers who don’t have a dedicated parking space or can’t install a charging unit at home, the company will help them find out if a public charger is located close to their home. DriveElectric staff make car recommendations based on the availability of public charging options, including the historic reliability of those networks. Potter said, the company has denied lease applications from customers who don’t have adequate access. Erika Myers checks out the Tesla Model X with a member of the DriveElectric team at the Low Carbon Networks and Innovation Conference in Telford, England. (Photo courtesy of ENA Events) With roughly 40 percent of British residents living in multifamily dwellings, Potter believes that public fast charging stations will play an important role in the future. While current laws require new multifamily dwellings to include charging units, in Potter’s view, this transition isn’t happening quickly enough or at scale. He noted that DriveElectric’s own research shows that customers who own EVs with larger batteries — and thus, a longer range — tend to charge less frequently. Potter theorizes that if customers only end up needing to charge once a week, public fast chargers could be sufficient for drivers without dedicated charging at home. Building out charging corridors In addition to community-based fast charging, the U.K. has also recognized that charging corridors on or near the country’s highways will be needed to help allay range anxiety for drivers traveling between urban centers. Based on an analysis by National Grid — the U.K.’s only transmission system operator and owner — about 60 percent of the exits on U.K. highways are within 3.1 miles of the nearest transmission substation. Fewer than 20% are less than two-thirds of a mile from transmission substation locations. An adequate charging corridor between the U.K.’s urban centers would require a total of 54 locations, assuming a 50-mile distance between sites, according to Graeme Cooper, National Grid’s Project Director for Electric Vehicles. The utility could provide power directly to about 40 of those charging locations without triggering wider — and prohibitively expensive — system upgrades, he said. “National Grid sees an opportunity to directly supply these charging depots using the next generation of ultra fast chargers at 350 kilowatts, which could require many megawatts of power at a single site,” Cooper said. Sample of the National Grid analysis identifying the proximity of transmission substations to potential corridors for EV charging stations. (Source: National Grid) National Grid earns money based on the value of its regulated assets and receives incentives from Ofgem (short for Office of Gas and Electricity Markets) based on “sweating the existing asset base,” Cooper said. The American term is “doing more with less.” It’s a win-win opportunity, he said. National Grid could directly optimize the use of its transmission system with little additional investment, and the U.K. could more easily reach its transportation electrification goals by investing in the necessary highway charging infrastructure to reduce drivers’ range anxiety. The U.S. Department of Energy (DOE) prepared a similar substation analysis in a September 2017 study, National Plug-In Electric Vehicle Infrastructure Analysis. The report noted that most substations were an average of 2.9 miles from the nearest highway exit. Out of the 11,710 interstate exits across the country, only 3 percent were farther than 10 miles, and 35 percent were farther than 3 miles. Clearly, the U.S. has similar opportunities to develop infrastructure projects along interstate corridors to reduce interconnection costs for hundreds — if not thousands — of multi-megawatt highway charging depots. A DOE map with highway exits color-coded by distance to the nearest electrical substation. (Source: DOE) Building customer confidence in managed charging In addition to the vehicle incentives, the U.K. has also made major investments and adopted policies to increase charging infrastructure. As part of the Road to Zero Strategy, the country launched a £400 million ($510.8 million) fund for investments in charging infrastructure. Incentives include up to £500 ($640) for residential charging equipment. The U.K. currently has 14,000 public charging points and 1,300 fast chargers, and it is the first nation in the world to pass legislation requiring the use of managed charging capable equipment. The U.K. has also undertaken one of the largest managed charging research studies in the world. This project, administered by Electric Nation and funded by Western Power Distribution and Ofgem (as part of the RIIO program), will examine customer acceptance of charging restrictions. The study will also look at the impact of incentives and system performance on customers’ willingness to participate in these programs. What is RIIO? One of the main objectives of SEPA’s Fact Finding Mission to the U.K. was to study the country’s adoption of performance-based regulation. In the past four years, the energy industry in the U.K. has undergone a major shift, from the traditional utility business model to what is called RIIO, which stands for Revenue = Incentives + Innovation + Output. Essentially, what this means is that utilities in the U.K. don’t make their money from investing in large, capital projects such as power plants and transmission, the model for investor-owned utilities in the U.S. Rather, revenue is based on achieving specific performance-based outcomes related to customer service, system efficiency and innovation, including the growth of renewables. Capital and operational expenses are effectively capped. Such changes do not come without problems, as we heard from U.K. energy officials. Debates have arisen about how utilities are measuring outcomes and what a reasonable rate of return should be, and reforms to the next iteration of RIIO are in the works. The project recruited 673 EV drivers, each of whom was provided with a Level 2 charger at home. The drivers in the study came from a wide mix of urban, suburban and rural areas, with the vast majority charging primarily at home. The trial will be completed in December 2018, with a final report published in October 2019. (Initial findings are available online). According to Nick Storer, one of project investigators at Electric Nation, the organization set up to run the study, the research to date shows customers don’t notice when their charging equipment is being managed. “As long as the demand response event didn’t have an impact on their journey plan, customers didn’t care,” he said. Phone apps were used to allow customers to override a demand response event, for example, if they had an immediate need to charge their vehicles. After customers experimented with the override and were confident that it worked, that feature was infrequently used over the remainder of the program. To get more on managed charging and other EV topics, check out our transportation electrification pathway. The implications here are significant for the U.S. market. Like driving EVs themselves, experience with managed charging programs could drive wider acceptance and customer participation. Next Steps: Consumer education is key One of my key takeaways from the fact-finding mission: To advance EV deployment, the U.S. has much to learn from the U.K. and other European nations. We should take advantage of their ideas and best practices for customer education. Mike Potter from DriveElectric believes strongly that EVs will be the ultimate winner, not because they are green, but because they are just better — less expensive to fuel, better to drive and cheaper to maintain. He feels that anyone trying to educate customers should approach the technology from that perspective and help customers compare the fuel savings to what they are driving today. As the trusted energy advisor for many Americans, electric utilities could play a critical role in consumer education. In addition to simple steps, like including EV information available on their websites, utilities could also provide customers opportunities to experience the technology through ride-and-drive events. Utilities could also partner with third-parties to make important decision-making tools available to customers. In addition to developing a common goal for transportation electrification, we need to plan for the long game and ensure that, at the very minimum, we have the tools in place to use EVs as grid assets, when and where they could provide value. Similar to what we see in the U.K., a comprehensive national strategy is an effective starting point for providing clarity, direction, and market signals. In Part 2 of this series, Erika Myers discusses how electric utilities in the U.K. are playing a strong role in developing EVs as a grid asset that can provide critical demand flexibility. For more information on what U.S. utilities are doing to prepare for EVs, see Myers’ recent report, Utilities and Electric Vehicles: Evolving to Unlock Grid Value. Erika Myers also leads SEPA’s EV Working Group and, beginning in 2019, will head up its new Transportation Electrification Pathway. For more information on how to get involved, contact her at email@example.com. Share Share on TwitterShare on FacebookShare on LinkedIn About the Author Erika Myers Principal, Transportation Electrification Erika H. Myers is a Principal of Transportation Electrification for the Smart Electric Power Alliance (SEPA). Erika has 16 years of experience in the clean energy sector and specializes in the nexus between the grid, electric vehicles, and renewable energy. She leads SEPA’s content for transportation electrification and manages SEPA’s Electric Vehicle Working Group. She has authored and co-authored numerous reports, briefs, and articles and regularly speaks at events around the country. Prior to joining SEPA, Erika spent four years as a consultant with ICF International and five years as the Renewable Energy Manager for the South Carolina Energy Office, specializing in renewable energy and alternative transportation fuel policy and regulatory planning and development. Erika has a bachelor’s degree in biology from Clemson University and a master’s degree in earth and environmental resources from the University of South Carolina with a specialization in clean energy.