After the fuss dies down, do we know what it all really means?
Change must come
There’s already growing acceptance about electric vehicle growth. There’s been a large take up of solar power and other renewables, whether domestically or commercially. There continues to be development in different forms of storage and demand response. What is the thread that links them? The answer lies in the form of subsidy. Every local generating technology employed is underpinned by government cash. To date there are over 200,000 EVs on the road, with half having received a subsidy up to £4,500 at purchase. The pump has been primed, but it won’t be long before the grants diminish. Acting now might pay in the long term, take advice from trusted sources.
How much and what for?
According to the Institute of Fiscal Studies, Government receives £27.6Bn in Fuel Excise Duty. That has to be replaced and VAT on domestic electricity is only 5%. Businesses pay 20% and many will to have to have charging points on their premises. Will they charge employees, or provide it free, and is that then a Benefit in Kind? Charging a car domestically is estimated to add 50% to the annual bill, roughly £400, so only £20 of VAT into the exchequer. The existing electricity supply model simply doesn’t fit, we’re a long way off knowing what future costs for this revolution will be.
We shouldn’t forget that this is just the issue of finance after the plug. Who supplies and pays for the infrastructure? We know that the grid is already struggling at times, how do we stop the lights going out? California, an area similar in size and population to the UK, is so reliant on renewables that the intermittency of supply regularly causes issues with power outages.
Smart, or controlling?
The OFGEM report points to a multi-faceted approach as the way forward. We have thousands of commercial and industrial scale renewables feeding the grid, plus hundreds of thousands of domestic inputs. Although in its infancy, we are seeing an increase in Storage enquiries. Trials connecting these sources are expanding. OFGEM states that it wants to give consumers a greater say in what they consume, where from and when. In order to do this, it needs control technology to deliver effectively, via the internet. Savings to consumers are reckoned to be in the region of £17-40Bn by 2050, an astronomical sum in anyone’s book. However, in comparison, the cost of the EV revolution is mooted to be around £200Bn!
Not only are we a long way off every consumer having the Smart technology required to drive this, the first generation of meters doesn’t even have the protocols in place to communicate with different suppliers. Take up of devices such as Hive has been good, so, domestically at least, consumers seem accepting. However, fear of hacking might prevent a commercial organisation from allowing outside interference in its processes. Efficient Power Solutions has the capability to put Building Control packages together, allied to a full Managed Bureau service, which allows us to deliver this for clients without compromising security.
Where do you go next?
The fact that the publication of the OFGEM report and the EV announcement took place within days of each other is perhaps no accident. Both have attracted huge amounts of publicity, much of it critical. That these changes are deliverable is probably not in doubt, advances in technology are rapid. For example, we may be looking to Hydrogen-powered vehicles rather than EV by 2040, so some of the concerns about the grid may not be valid. What is clear is that we’re entering a period of massive change to the way we do things, how we work and how we travel. Our reliance on electrical power for all that technology is only going to grow.
For unbiased advice on any of these topics, contact Dave or Kevin at Efficient Power Solutions on 01909 569016.