While the UK government has vowed to end the sale of all new conventional gasoline and diesel cars by 2040, as part of a wider plan to fight air pollution, there is talk that electricity demand will lead to a fast and dirty response to a strained power grid.
But here’s what everyone’s missing in that debate: While EV sales are going to rise and electricity demand to power them will strain the grid and lead to less-than-ideal power generation solutions, the whole plan will help clean power generation to increase its market share.
Nothing is black and white. And big transformations are never immediate. We’re not talking about an overnight elixir that will magically clean up the air; we’re talking about a step-by-step process that is gradually less dirty.
Overloading the Grid (Mind the Gap)
The UK’s National Grid anticipates peak demand from electric vehicles alone being around 5 GW, which represents an 8 percent increase from today’s peak demand.
This peak demand forecast assumes what the National Grid calls the “Two Degrees” scenario, in which most cars would be EVS, with only 6 percent of them hybrids. But by 2045, only pure EVs would be on sale.
According to Wood Mackenzie, the UK plan to ban the sale of new gasoline and diesel cars by 2040 “will have a massive impact on the refining sector and the oil markets.”
To handle the extra peak demand, the most flexible way is to build open-cycle gas power plants.
One of the options for a “rapid response” plug-in capacity to make up for shortfalls could come from certain open-cycle gas-fired plants that are more polluting and less efficient.
So, while it’s still better than burning coal, the massive anticipated demand for energy to power up EVs on British roads may require some additional environmental triage—but, again, this is to be expected if renewables are ever to gain the market share they need to bring prices down and make it all mainstream. Related: Shale Producers Hedge At Much Lower Prices
The first step is dealing with coal-fired plants, which the UK is proposing to close by 2025. And open-cycle gas-fired plants are certainly cleaner than coal, even if they aren’t the end-all ideal.
Coal is rapidly losing share in the UK electricity generation fuel mix, while natural gas and renewables are boosting their respective shares. Coal’s share dropped to 11.3 percent in Q1 2017 from 15.9 percent in Q1 2016, government figures show.
At the same time, natural gas boosted its share to 39.9 percent from 37 percent a year earlier, while the renewables share increased to 26.6 percent in Q1 2017, from 25.6 percent in 2016.
Open-cycle plants may be more polluting than combined-cycle gas power generation, but their flexibility could help keep the system stable while increasing the share of renewables, according to Drax Group plc which is responsible for generating 7 percent of the UK’s electricity.
Drax is developing four rapid response gas power plants to increase the flexibility, Drax Power CEO Andy Koss said earlier this month. Once the plants are given consent, they will secure Capacity Market contracts and become operational in the early 2020s.
A spokeswoman for Drax told Bloomberg that under UK environmental regulations, such plants are allowed to be operated for a maximum of three months a year, and the company doesn’t expect to operate the units for that long.
The UK subsidiary of Germany’s utility RWE plans to submit proposals to redevelop the former site of coal-fired and biomass plants in Tilbury, Essex, into a CCGT with capacity of up to 2,500 megawatts, 100 MW of energy storage facility, and a 300-MW open-cycle gas turbines plant.
No Fighting the EV Wave
Across Europe, EVs are on the edge of a major breakout—and they have a lot of help from the government and an excited auto industry.
But it’s also getting a boost from European Union regulations, which dictate that by 2021, the average emissions of all new cars sold must be 40 percent less than today—a challenge that can only be met with EVs.
In the meantime, Norway leads the way, with almost 40 percent of all new registered passenger cars now EVs. The country also now boasts the biggest fast-charging station in the world (28 cars can be charged in 30 minutes).
The Netherlands is the No. 2 leader in EVs, and is phasing out all conventional cars by 2025.
In July, plug-in EV sales hit a record 1.50 percent market share in Germany.
This is the new era in ‘electromobility’, and 2017 is a definitive one. Though questions remain about powering up these vast new fleets of EVs, we’re not at the finish line yet. Norway, for one, isn’t concerned in the least: 98 percent of its electricity comes from hydropower, so it’s about as clean as it can be. Related: Barclays: Oil Prices To Drop This Quarter
Denmark has also come up with a creative solution … it’s using parked EVs to feed back into its grid--and even paying EV owners to do it. Vehicle-to-Grid (V2G) models working under the Parker Project in Denmark, and in collaboration with Nissan, Mitsubishi and others—can both receive grid electricity and give it back, helping to solve the peak demand issue. According to Bloomberg New Energy Finance, owners are earning up to $1,530 per year doing this.
At the end of the day, the UK, too, will find an answer, but the EVs have to come first because the market must dictate terms.
By Tsvetana Paraskova for Oilprice.com
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