On Tuesday the Prime Minister Scott Morrison announced the Federal Government’s ‘Future Fuels and Vehicles Strategy’, which commits to spending $250 million on electric vehicle (EV) charging infrastructure as part of the push to net zero by 2050.
The expanded Future Fuels Fund will focus on four key areas of investment, including:
The new public charging stations, to be accessible by up to 84 per cent of the population, will help cut transport emissions by more than eight million tonnes by 2035, according to the policy.
It’s almost as if the potential of EVs to end the weekend was forgotten.
In Australia around 2 per cent of all new vehicle purchases are EVs. In Britain its 15 per cent, and more than 70 per cent in Norway.
The Future Fuels policy does not include subsidies, tax incentives, sales targets or minimum fuel emission standards. This and the Federal government’s failure to announce abolishing the luxury car tax on EVs was criticised by the EV industry.
In its policy paper, the Federal Government said,
“some feedback called for the government to provide subsidies or tax concessions to reduce the current price gap between conventional and low emission vehicles.”
“However, reducing the total cost of ownership through subsidies would not represent value for the taxpayer, particularly as industry is rapidly working through technological developments to make battery electric vehicles cheaper.”
Labor’s Chris Bowen also questions the impact of current taxes on EVs.
“Why don't they match Labor's tax cut for EVs? That's our policy to reduce the price of electric vehicles, give people more choice, a substantial tax cut, particularly for business buying fleet. Fifty per cent of our purchases are fleet and fleets turnover every three years.”
The Minister for Industry, Energy and Emissions Reduction Angus Taylor and the PM say the policy is actually about choice, not telling people which cars to drive.
“Voluntary adoption of electric vehicles is the right pathway for reducing transport emissions over the long term. Stringent standards, bans or regressive taxes will limit choice and increase the upfront costs of cars for Australians.”
The Federal Opposition went to the 2019 election with an ambitious EV policy. While Labor’s current policies have not yet been finalised, Labor’s energy spokesman Chris Bowen called the government policy baby steps telling ABC News Breakfast;
“charging infrastructure is great, we know it's important for range in anxiety, but the money that the Federal Government put in yesterday is even less than the New South Wales Government has put in in one state, and they haven't tackled the challenge of reducing or the opportunity of reducing the price of electric vehicles.”
Energy powerhouse Trevor St Baker says the government’s EV policy lacks ambition but is a start. Mr St Baker is a major EV investor, and backer of Tritium, one of the biggest EV fast charging companies in the world.
“Now that there are more $35,000 EVs coming on to the market, I think we have arrived at the break-even tipping point,” he told The Australian.
“More people are looking at the savings. Home charging costs 3c/km, public charging costs about 6c/km, and the typical gasoline cost is about 15c/km.”
Minister Taylor is confident Australians will take to EVs like they have to rooftop solar.
“Like we saw with our world-leading rooftop solar uptake, we know that when new technologies reach price parity, Australians rapidly adopt them. We will take these lessons from solar integration into our reform work to ensure our grid is ‘EV ready’ to keep the lights on and bills affordable for everyone.”
State government fleet managers are well advanced in looking at replacing their fleets vehicles with EVs. The benefit of this is in the eventual second-hand market this will create. The waiving of stamp duty and registration fees and other financial rebates for new electric vehicle purchases in states is also contributing.
Tariff reform a key to success
EVs are also likely to play an increasing role in managing system security and reliability through both the soaking up of excess solar when charging and the harnessing of their storage capacity during peak demand periods when they are charged. Many cars are not on the road during either peak solar export periods or peak energy use periods, and can potentially act as battery storage and discharge during these times. Tariff reform to promote flexible demand will have a role to play.
The electricity distribution network is already designed to have capacity for peak events that only occur on a few days a year. There is plenty of existing capacity much of the time in much of the network to host the charging of EV’s. Tariff reform is critical to ensure this is utilised. Oakley Greenwood’s report Pricing for the Integration of Distributed Energy Resources says that the ability to connect Distributed Energy Resources (DER) such as solar to the grid and have unconstrained ability to export electricity in parts of the existing network was becoming more difficult. We should learn from this to avoid a similar outcome for EV charging.
The Oakley Greenwood assessed how pricing structures that could be used to signal how DER is provided in the right place, at the right times and in the right quantities, can reduce costs in the electricity supply chain and thereby benefit all consumers. These pricing structures will also be critical to the efficient integration of EV charging.
Encouraging the expansion of charging infrastructure, including smart chargers in homes, and encouraging EVs in commercial and government fleets and considering tariff reforms to better integrate EVs into the grid are all positive measures.
As part of the strategy the federal government is proposing to bring forward electricity market reforms to state and territory energy ministers with an initial focus on:
Home Smart chargers are likely to play an important role in integrating EVs into the operations of the grid. They are designed to help manage when EVs charge and both Origin Energy and AGL have both been involved in ARENA-backed trials of charging technologies, including smart chargers.
ARENA trials have also included charging companies and distribution networks. Some of the trials have included:
The government argues it has a particular role in addressing any market failures or gaps in the rollout of charging infrastructure and is aiming to deal with this through co-investment with industry as well as using the Emissions Reduction Fund. It announced in October that an ERF model to cover emissions reductions from EV charging and hydrogen refuelling would be developed with the Clean Energy Regulator leading public consultations.
It will also have the Bureau of Infrastructure and Transport Research Economics investigate charging blackspots in regional Australia and have the Department of Industry, Science, Energy and Resources deliver a national roadmap over the next three years on optimal locations of future battery charging and hydrogen refuelling infrastructure, as well as how it can be integrated into the grid.
The strategy states its Future Fuels Fund will help commercial fleets and consumers to install charging infrastructure including for heavy and long-distance vehicles and smart charging for homes.
The government’s strategy estimates it approach will involve deployment of charging infrastructure in over 400 businesses, 50,000 homes (out of more than 8 million households according to the Census) and over 1000 new public access fast charging stations.
There is no doubt that access to charging infrastructure will play an important role in the uptake of EVs given our geography. International experience demonstrates a strong correlation between public charging infrastructure and the uptake of EVs. The availability of fast charging has the most influence on EV adoption.
Fast charging has a greater impact on both electricity supply and distribution. Policies that encourage EV owners to charge vehicles outside peak demand periods, and to encourage EV charging providers to optimize grid utilisation make a lot of sense.
With the world’s eyes on COP26, Australia may be looking in the wrong direction for the next major step on decarbonisation. Bilateral trade pacts centred around a US-EU alliance could be the way forward and may give Australia pause for thought on its own approach; but the picture may be more complicated.
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