AEMC releases electric vehicle issues paper

Australia needs a roadmap to get its energy system ready for an electric vehicle future, according to the Australian Energy Market Commission (AEMC).

Releasing an issues paper as part of its 2020 Retail Energy Competition Review, the commission said planning for the boost in energy use from electric vehicles will ensure the new technology has a positive impact on the energy market.

The goals of the issues paper are:

1. To assess whether energy retailers are innovating in relation to the technology to provide customers with offers they want. Traditionally economists consider that a key benefit of contestable and competitive markets is that they provide incentives for businesses to innovate to provide new or diversified products to meet consumers needs. By picking a prominent new technology and assessing whether this is occurring assists our overarching assessment of the state of competition in the retail energy market.

2. To analyse if there are any retail regulatory barriers to innovation occurring. Assessing the barriers is important because as the policy adviser to governments and rule maker in the sector the Commission can then recommend rule changes to remove any barriers.

“Electric vehicles will boost demand for electricity and could have a big impact on the energy market,” AEMC Acting Chief Executive Suzanne Falvi said.

“Sales of electric vehicles increased by more than 200% between 2018 and 2019 and we need to lock in lower-cost ways to support consumers who want them. If we get ahead of the curve, we can make sure this technology makes a positive contribution to our future power system and doesn’t become another cost driver.

“We’re starting a conversation today with this issues paper to generate ideas and identify what barriers to innovation there might be that could stop new electric vehicle products and services reaching consumers,” she said.

The commission’s issues paper highlights public charging stations as one example of how electric vehicles can have a large impact on the grid. One eight-charger station built in Adelaide in 2017 was equivalent to the connection of 100 new homes.

The paper also says that while electric vehicles have an obvious value as a mode of clean transport, they could also benefit the market by promoting more efficient use of the infrastructure we already have.

“Electric vehicles have potential to put energy power back in the hands of consumers and help keep the system reliable and secure,” Falvi said.

“With the right systems in place, households can charge their vehicles when energy is cheap and have the option to sell power back into the grid when it’s more expensive. Along with solar PV and smart appliances, electric vehicles can be part of a consumer’s future toolkit to reduce their energy output when prices are high.”

According to the AEMC issues paper, digitalisation will see smart and flexible charging systems benefiting consumers without any conscious effort and — given the right market signals — electric vehicle charging load could provide a significant demand response resource for the system.

Technology developments might also increase potential for households to use electric vehicle batteries ‘behind the meter’ to soak up excess rooftop solar generation and then discharge electricity to their own home or to the grid. Few retail products are currently targeting this market due to the limited uptake of electric vehicles.

“Electric vehicles are an opportunity for retailers or new energy providers to innovate with new residential products,” Falvi said.

“While existing consumer protections must apply to new products and services, we need to make sure that existing rules and regulations don’t stifle innovation.”

The commission wants to know what products and services are being developed for residential and public charging, including in workplaces, shopping centres and car parks. It also wants to know whether retail market competition is resulting in innovation in this space.

In asking stakeholders for feedback, the commission is considering whether any existing retail regulation is creating barriers to electric vehicle use.

Submissions to the issues paper close 19 March 2020.

To access the issues paper, please go here.

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