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Accelerating the Energy Transition - Can Electric Vehicles Show the Way?

By Lucy Craig, Director, Energy Technology and Innovation, DNV GL

Accelerating the Energy Transition - Can Electric Vehicles Show the Way?Lucy Craig, Director, Energy Technology and Innovation, DNV GL

Decades of dramatic change lie ahead for the energy sector, bringing both opportunities and risks. The world is starting to wean itself off fossil fuels and move towards a net-zero carbon future. There will be a profound shift towards electrification and generating that electricity from renewable sources. This transition from fossil-based to zero-carbon is happening fast but not quickly enough to meet the Paris Agreement’s objectives to limit global warming to ‘well below 2°C’, let alone 1.5°C.

“Electric vehicles have the potential to support the integration of renewables by providing flexibility through vehicle-to-grid support in balancing electricity demand and supply”

These are the stark conclusions from the recently published third edition of DNV GL’s Energy Transition Outlook. Our modelling of the world’s energy systems confirms that available technologies have the potential to close the ‘emissions gap,’ the difference between the current rate of decarbonizing energy and the pace needed for global warming of 1.5°C. We believe that a combination of measures can get us there. Our checklist for the next decade includes growth of more than 1000 percent in solar power to 5 terawatts (TW) and 500 percent in wind power to 3 TW. Fifty million electrical vehicles (EVs) per year will be needed by 2030, requiring a 50-fold increase in batteries, and large-scale charging infrastructure. Other items on the list include more ultra-high voltage transmission networks; annual improvements in global energy intensity (the energy use per unit of output) by 3.5 percent; and low- and zero-carbon hydrogen to heat buildings and industry, fuel transport and capture value from surplus renewables.

Without these extraordinary measures, our forecast indicates a world that will be 2.4°C warmer at the end of this century than in the immediate pre-industrial period.

To enable the changes that technology can bring, extraordinary policy action is needed: policies that advance renewables, new de-carbonization technologies and systems, EVs and energy efficiency. 

Electric vehicles are an excellent example of a new technology that can accelerate change, when the right policy measures are in place. Transport currently accounts for 28 percent of total energy demand. Reducing the impact of climate change, hence, depends on electrification of transportation.

Recent news reports show that in Europe, sales of battery electric vehicles and plug-in hybrid electric vehicles totalled over a quarter of a million (259,000) in the first six months of 2019, which is up 34percent compared with the same period in 2018. The largest increase is in Germany, which displaced Norway as the leader in sales volume, although in terms of the total number of electric vehicles on the road in Europe, Norway remains the leader with over 10 percent of all vehicles on the road being EVs. Globally, DNV GL’s analysis shows that there will be over 4 million EVs on the world’s roads by the end of 2019, an increase of over 50percent year on year.

Of course, a much bigger impact will be made in the world’s largest countries. Thanks to major investment over the past decade, exceeding $60 Bn US, China is already leading the way in electric vehicles, with more EVs on the roads in China than in the rest of the world combined. For China, there have been several reasons for moving to electric vehicles:

- Efficiency: EVs are more than three times more efficient than the internal combustion engine

- Pollution: EVs have zero emissions at the point of use

- Carbon dioxide emission reduction.

And there is a further incentive for investment – leading the way in technology. In China, there are now over 100 manufacturers of EVs, with hundreds of other companies producing components for these vehicles. Chinese EV manufacturers are now starting to look at the export market, for example, in India, where favourable policies towards EVs have recently been introduced.

Globally, vehicle manufacturers are investing heavily in electric vehicles.

All major vehicle OEMs have announced their plans for conversion to EVs during the coming decade, driven mainly by governments raising regulatory requirements for emissions around the world.

With all these investments in EVs and batteries, the technology is developing fast, and costs are coming down. However, one of the obstacles to growth often raised by consumers is “range anxiety” – the fear that your EV will not have the battery power to complete a longer journey without waiting for it to charge, or worse still, being unable to recharge the vehicle when and where you need it. But this issue is being addressed. In many countries, governments, municipalities, traditional service stations and EV manufacturers are investing in charging networks. The range of EVs is also increasing as battery technology develops – many EVs can now complete over 400km without recharging.

Another obstacle to buying an EV is cost, but costs are also coming down. In DNV GL, we expect price parity – that is, when the full-life costs of an EV are the same as that of an Internal Combustion Engine – to be reached in 2025. However, for now, the take-up of EVs does still depend on favourable policies – for example, one of the main reasons why nearly 50 percent of vehicle sales in Norway are EVs is due to policies on taxation, including exemption from VAT, and a string of other benefits such as lower toll road costs, bus-lane driving and free parking in several municipalities. For many Norwegians,an EV is simply the best economic choice.

Electric vehicles also have the potential to support the integration of renewables by providing flexibility through vehicle-to-grid support in balancing electricity demand and supply. EVs can be viewed as smart, connected batteries on wheels. As range increases, charging infrastructure improves, and the uptake of EVs accelerates, the option of using spare capacity in EV batteries for vehicle-to-grid (V2G) services becomes increasingly valuable. If you were told you might never have to pay for the energy going into your vehicle, just by making your spare battery capacity available to the grid, you might well say ‘yes.’ In

future decades, as new vehicle sales are dominated by EVs, they will play a major role in frequency response and help to shift renewable generation to when there is greater need.

So that leaves one final question: will your next car be an EV? 

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