Australia needs to get smart in charging electric cars

In 1900, electric vehicles outsold all other car types in America. Yet three decades later they were gone, a key factor in their demise being the discovery of oil in Texas leading to fuel prices falling dramatically.

Cheap petrol combined with the mass production of the Model T Ford made the internal combustion engine a winner. While EVs were quieter, cleaner and vibrated less, simple economics put the electric-vehicle industry out of business.

The reverse of this is now well under way. While Teslas remain expensive, the move towards mass EV production by all major vehicle manufacturers is pushing EVs inexorably down the cost curve. The fuel cost differential is stark: a 2019 study estimated it is $1600 a year cheaper to run an EV than a petrol car – and that study was done using a petrol cost of $1.50 a litre, not the $2 a litre that car users are getting used to seeing. Servicing an EV, with about 20 moving parts, will also cost much less than servicing a petrol car that has closer to 2000 moving parts.

While Australia remains an international laggard in EV adoption, demand now greatly outstrips supply, and when global production ramps up we will see a rapid growth of EVs on Australian roads.

Following the federal election, Labor now has the mandate and in fact the demand from the public that they want real and tangible action against climate change. The rise of the teals and wave of support behind the Greens clearly points to a shift in public expectation towards something other than lofty targets.

What solar panels were to the mid-2000s, electric vehicles will be to the 2020s and beyond. But if they are plugged in unchecked without clear policy leadership they will wreak havoc on the electricity grid.

For our electricity sector, mass adoption of EVs will be a major new load on the system. The average Australian house uses 5000 kilowatt hours of electricity a year. Adding an EV will increase that by about 3500 kilowatt hours – a 70 per cent increase.

That’s a lot more electrons flowing through your meter and, importantly, through the poles and wires running down your street. How much new investment will be required in those poles and wires (and therefore cost to electricity customers) will depend on how smart we are with when we charge our EVs.

In most of Australia, peak electricity demand occurs in the late afternoon of blisteringly hot summer weekdays, often a few days into a prolonged heatwave. The demand peak is largely driven by airconditioner use. These peaks drive investment in power supply as we need enough generators to make, and enough network capacity to transport, all the required electrons.

The dystopian nightmare for the electricity sector is that uncontrolled EV charging will make peak demand worse. If we have millions of Australians coming home during these heatwaves, turning on their air conditioner and starting to charge their EV, our grid won’t cope.

The good news is this dystopian future can be easily avoided – if we act soon.

Most Australian homes pay a flat rate for their electricity regardless of what time they use it, but this is changing and more are moving onto peak/off-peak tariffs. Off-peak pricing is common in many parts of the economy. It’s always cheaper to get a flight when you can avoid business travellers and school holidays and most cities offer cheaper public transport fares outside peak times.

One small step will make a huge difference: ensure households adopt peak/off-peak electricity pricing when they get an EV. While “forcing” people down a particular price path tends to make politicians nervous, in this case it’s forcing new EV owners towards major savings on their power bill. If the difference between peak and off-peak rates is 15c per kilowatt hour, the average EV owner will save $525 a year by charging during off-peak rather than peak times.

Aligning EV charging with off-peak times is easily done. It does not involve setting the alarm at 2am to get up and plug your car in. The smarts in chargers and on phone apps set charging to off-peak times simply by pressing a couple of buttons. You can still plug your car in when you get home on those sweltering summer afternoons, but your smart charger will know to not start charging until the off-peak period begins a few hours later.

While there is much interest in the business models of fast-charging networks, most EV owners will not use these very often. Most Australian dwellings have a garage or carport and these will be fitted with EV chargers over the coming decades. For those households, more than 90 per cent of EV charging will be done at home and almost all of this can be effortlessly managed so that it occurs outside peak times.

Managing the EV revolution well isn’t just about avoiding grid dystopia, it’s about delivering nirvana – much higher utilisation of our existing electricity assets. While parts of the grid have virtually no spare capacity at peak times, overall utilisation of our electricity networks is about 50 per cent. If the increase in demand from EVs is managed with smart EV charging, we can greatly increase this. That’s more electrons through the same poles and wires, which means cheaper rates for each kilowatt hour and lower bills, including for those who don’t have an EV.

Even without considering the emissions benefits, the clear reversal of the simple economics from a century ago tells us the EV transition will happen and it may happen sooner than most people think.

The benefits of smart EV charging with off-peak pricing are obvious, but we need to act now to make it reality when EV adoption takes off.

Our new federal Energy Minister will have much to achieve in the next three years, but an essential leadership task will be working with state energy ministers to ensure EV owners get onto off-peak pricing.

It’s a rare policy win-win: EV owners save on charging and we all benefit from lower network charges.

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