7 minute read

Where the rubber hits the road on electric vehicles

How market forces and government policy must converge to drive adoption.

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John Chambers
04 August 2021

In the early 2000s, an energy revolution was underway, with the uptake of rooftop solar beginning to gather pace. Like electric vehicles (EVs) today and most new technologies, the cost of installing rooftop solar systems in those early days was expensive, however, government policy paved the way for greater affordability1.

Today, Australia has the highest rate of solar uptake globally, with more than 2.68 million rooftop solar power systems installed across the country by the end of 2020. That means one in four homes have solar panels on their roof.

Why then, when it comes to making the switch to electric vehicles (EVs), are we lagging way behind the world’s leading nations?

Only 0.7 per cent of cars sold in Australia last year were electric2 – a mere 2.7% more than 2019. To put that into perspective, 75% of new car sales in Norway – which is leading the world in EV adoption – were electric.

Given our solar uptake, and the fact that more than 70% of owned homes in Australia are single dwellings, there’s an opportunity for EVs to become a pivotal part of the Aussie smart home of the future.

When coupled with the decarbonisation of the electricity grid, EVs can help to reduce emissions in the transport sector and support Australia's economy-wide net zero targets in accordance with the Paris Agreement – all while replacing oil imports with Australian sunshine.

What is holding us back?

From a consumer perspective, the barriers continue to centre around choice and affordability of EVs and charging network limitations. The good news is that we’re starting to see technology and policy-led solutions emerge, to help us overcome these.

1. National policy approach

In most countries where EV uptake is strong, there is a clear EV/mobility target as part of the Government Policy Framework. In Norway, all new cars sold by 2025 will be zero emissions vehicles (battery electric or hydrogen) and in the UK, at least half of all new cars will be ultra-low emission by 2030.

AGL has advocated for a national EV roadmap that establishes a target and supporting policy initiatives. There is progress being made, in NSW for example, where the state government recently announced a A$490 million EV package including financial incentives for consumers and funds for infrastructure. We want to see more of this, to guide and support the investment made by AGL and others in our transport and energy future.

Road user charges for EVs have been a particular hurdle, with seemingly ad-hoc taxes proposed in several states which we believe will hold back the introduction and adoption of EVs in Australia.

Instead, we support a nationally-harmonised, distance-based road user pricing framework that can be applied equally to internal combustion engine (ICE) vehicles and EVs. EVs should only be transitioned into the road user pricing framework in the medium term of 5-10 years, and as EVs reach price parity with ICE vehicles.

Importantly, we need a national EV roadmap that establishes a target and supporting policy initiatives, to give industry the certainty they need to innovate and invest in EV infrastructure like charging stations, which in turn will support stronger consumer uptake.

2. Affordability and choice

In Australia, EVs are still relatively unaffordable – around A$30K more expensive than they are in other parts of the world.

That’s why AGL has advocated for Australian governments to focus policy efforts on increasing the variety of choice and affordability of new and used EVs in the Australian market. While the EV packages announced by the NSW and Victoria Governments will help to encourage more consumers to make the switch, leadership is also required in other jurisdictions and at the Commonwealth level.

AGL is helping to facilitate the transition with the launch of our electric vehicle subscription service in 2020. This service is available in Sydney, Melbourne and Brisbane, and gives consumers the opportunity to experience life behind the wheel of an EV without the commitment of owning one. We also have carbon neutral options available across all our EVs.

Until the cost of EVs comes down, the EV subscription service is a good option for anyone wanting to try before they buy.

When it comes to choice, there are currently only 15 fully electric vehicle models available in Australia3, although BMW, Ford, Lexus and Mazda all have plans to launch new models in Australia this year.

The MG ZS EV arrived in Australia earlier this year and is now available through our subscription service. The Kia Nero EV which launched more recently, is a great lower cost option, soon to be added to our range.

Being a right-hand driving nation with low demand, we’re at the back of the international queue for newer, cheaper vehicles being produced for a global audience. Right now, it’s a game of chicken and egg, but increased adoption, encouraged by mechanisms like Government subsidies, will position Australia more attractively, for manufacturers to sell at scale.

3. Charging network constraints

Charging networks are still relatively undeveloped in Australia, and we’ll need major investment, like we’re seeing in NSW, to fast track the development of charging networks, particularly in regional areas and other locations likely to be underserved by the market.

While accelerating their development is a priority, it needs to be done in a coordinated way, led by concerted policy efforts between the Commonwealth and state governments.

Customer experience must be front of mind too. In California, 18% of EV drivers have switched back to gas vehicles because charging their vehicles at home, the office or in public was so unsatisfactory4.

Technology platforms and apps can help consumers navigate the network now and as it grows, by making it easier for them to find charging stations – going some of the way to overcoming persistent ‘range anxiety’.

We see a simple, consistent experience for charging when roaming as critical for consumers – we do not want to see our consumers needing five different apps to manage charging at different networks, as is the case in some other countries.

4. Demand on the grid

We know that EVs create a technical challenge for the energy grid, and when people charge their EVs becomes increasingly important.

Again, technology offers some solutions, enabling us to orchestrate EV charging as part of a virtual power plant – helping consumers become active participants in our energy system, in ways which promote grid stability.  This means EV-grid integration can actually help solve other problems in our energy system.

We’re already exploring how orchestration can help us manage a decentralised energy system, through products and solutions that incentivise and enable energy management – like charging your EV at times of low demand or turning your air con down a few degrees on a hot day.

In 2020, we partnered with the Australian Renewable Energy Agency (ARENA) to run a three-year A$8 million EV charging trial with around 300 customers, to test the grid impact of vehicle-to-grid (V2G) charging and vehicle-API charging.

We also recently joined forces with OVO Energy, the UK’s largest independent energy retailer, and a global leader in net zero carbon living, to bring its Kaluza platform to Australia. Kaluza contains market-leading ‘flexibility’ technology, which intelligently manages the charging of V2G chargers so that the connected cars import energy during times of low demand, when energy prices and carbon levels are low on the energy system.

Looking to the future

As Australia’s largest energy retailer and generator, AGL will play an important role in powering the vehicles of the future, contributing towards the decarbonisation of Australia’s transport sector.

We are proud of our market-first initiatives, like our electricity plan exclusively for EV drivers and electric vehicle subscription service and we will continue to fulfil our commitments as the first Australian signatory to the EV100, committing to making our fleets across corporate and generation sites electric by 2030.

We believe that Australia is in the box seat on EVs, and it’s time for the rubber to hit the road. With the right conditions and leadership from both the market and government alike, we can accelerate EV adoption and integration across Australia and join the world’s leaders in driving the change.