Ofgem proposes to remove grid reinforcement costs in push to help EV uptake.

We have news, potentially good news. Ofgem recently published ‘Electric Vehicles: Ofgem’s priorities for a green fair future’ which includes their proposal aiming to eliminate barriers for EV charge point developers. In essence, this shifts the responsibility for paying for grid capacity upgrades from the developers to the DNOs. The good news? For large ultra-rapid charging projects, this could significantly reduce the project costs.  

The proposal also requires DNOs to forecast uptake of EVs and charging demand so they can pre-emptively upgrade the grid, allowing for quicker installation times. Syzygy also believes it will allow the development of a wide and fair EV charging network, not shaped by grid capacity, accessible to all drivers and incentivise EV adoption. A final decision on the proposal is expected by the end of 2021, and any changes will be part of the RIIO-ED2 price control which comes into effect in April 2023… watch this space. 

Ofgem’s Electric Vehicle Proposals 

On 4th September 2021 Ofgem published Electric vehicles: Ofgem’s priorities for a green fair future which identifies four priority areas: 

  1. Ensure the network is prepared for EV adaptation 
  1. Reducing barriers to network connection for EVs 
  1. Enable rapid development and uptake of smart charging and vehicle-to-grid technology 
  1. Support consumer participation 

Key Changes 

Currently when building EV Charge Points, charge point developers must pay towards any necessary reinforcement (increasing the capacity) of the local network. This is particularly prohibitive for rapid and ultra-rapid Charge Points; for large scale connections upwards of 1MVA (such as motorway services offering 20+ rapid EV Charge Points) the grid reinforcement cost can be in the millions of pounds.  

Ofgem’s minded-to position is to remove these costs for developers, and to transfer the responsibility for paying for the reinforcements to DNOs. These costs are likely to be recuperated through network fees applied to end-user electricity bills, spreading the cost across all consumers. 

Ofgem will also publish a Retail Strategy to support customer participation and incentivise flexible network usage, hoping to increase the uptake of EVs. 

Key Benefits 

Larger EV charging projects will be less expensive for developers as a large part of the grid connection costs will be removed. The proposal will make more potential sites commercially viable, which could snowball, leading to a greater uptake of EVs in more rural locations and more demand for Charge Points, which in turn will make more potential sites commercially viable. 

DNOs will be required to forecast EV uptake as part of the proposal – this combined with the full responsibility for upgrading the network means they can have a cohesive strategy for cost-efficient, proactive grid reinforcements rather than being reactive, upgrading as and when developers approach them. This will also speed up grid connections for new EV charging projects, which along with the cost has been identified as a significant barrier. 

Limitations 

The minded-to position of removing the costs only applies to reinforcement of a shared network. The cost involved with building new connections and assets solely used by the developer must still be covered by the developer. 

Dates 

If the minded-to position is confirmed it will come into effect on 1st April 2023 as part of the new electricity distribution price control period, RIIO-ED2. A final decision on the proposal will be made by the end of 2021. 

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