Ofgem official Kevin Baillie explains how new guidance published by the regulator on selling electricity to EV drivers will help make the transition to net zero a reality
Our daily news is packed with stories about the effects of the global gas shortage, and the need for us to transition to a more secure, sustainable and net zero energy system. This was something our CEO Jonathan Brearley spoke in depth about at the Future of Utilities event on Tuesday 8 March.
Innovation will have starring roles in this transition, affecting the technologies, processes, products, services, relationships, behaviours and rules that permeate the energy landscape. But, innovation is inherently unknowable which creates challenges for regulation. We recognise that remaining relevant in the face of rapid, technology-driven system change means we need to harness new regulatory perspectives and tools.
Ofgem is playing a critical role in creating the right infrastructure for net zero to thrive.
In time, reforms (such as our Strategic Change Programmes, Decarbonisation Action Plan, and our EV Priorities) will provide environments more suited for innovations that can benefit current and future consumers. And, the continued roll-out of smart meters and the transition to market-wide half-hourly settlement will enable smarter, flexible services. But strategic reforms alone aren’t enough. In parallel, we need more agile and adaptive tools (like the Strategic Innovation Fund and the Energy Regulation Sandbox) – approaches that allow us to keep pace with innovations and steward their entry into mainstream markets.
One of the ironies is that the innovators (and their investors) that drive change crave certainty. Market and regulatory arrangements can provide such certainty, but with certainty and stability comes inertia, making rapid regime change difficult.
Former US secretary of the treasury Hank Paulson and American technology entrepreneur Bill Maris have observed the tension between innovation and regulation. Paulson said “regulation needs to catch up with innovation” and Maris observed that “the reality is regulation often lags behind innovation”.
The transition from internal combustion to electric vehicles is a timely case in point. EVs don’t fit neatly with a legislative model that defines an electricity consumer by the premises they occupy. The designers of the current regime (legislation, regulations, system arrangements, trading rules, sector norms, etc) quite reasonably expected customers to consume electricity at fixed premises (not on-the-go), for domestic, business, education and leisure uses, not for travel (trains and milk floats being the obvious exceptions).
In the last five years, our Innovation Link has spoken with 100 or so innovators looking to understand how the supply rules apply to EV charging models. We have explored the following questions:
What happens if you want to charge your EV at your parents’ or a friend’s house, or at the cinema?
What if you use public chargepoints when you’re on-the-go, but want to pay through your household electricity bill?
What if you’re an EV fleet operator and you want to pay for the charging done at your employees’ homes?
What happens if you rent your EV charger and driveway to your neighbours, and sell them power that comes from your rooftop solar-PV as well as your normal supply?
The Innovation Link is part of Ofgem’s agile, adaptive response, and provides bespoke, bilateral (non-binding) feedback to individual innovators. It was always our plan to produce broadcasts covering the most frequently raised issues, thereby building wider understanding and confidence in the regulatory treatment of innovations.
Today we’re publishing an update to a 2019 guide on selling electricity to EV drivers. This version covers eight (previously four) charging scenarios, including peer-to-peer and fleet arrangements. We expect it will be useful for innovators, chargepoint operators, local authorities, EV drivers, fleet operators, trade associations, investors, and innovation support providers.
By their very nature, innovation and regulation will forever be locked in a discursive embrace. Innovation’s job is to pathfind, regulation’s is to maximise benefits to consumers while limiting harm. By seeking out opportunity to make the transition to net zero a bit easier, a bit simpler, a bit more accessible, it’s another step on our journey towards weaning ourselves off fossils fuels and making low carbon fuels the new normal.
Kevin Baillie is senior manager of Ofgem’s Innovation Link programme