Considered in Grand Committee
My Lords, these draft regulations will be made under the powers provided by the Automated and Electric Vehicles Act 2018. They will mandate that most new private electric vehicle charge points sold in Great Britain be capable of smart charging and meet minimum device-level requirements. They will play an important role in helping us meet our transport decarbonisation targets.
As announced by the Prime Minister as part of the world-leading 10-point plan for a green industrial revolution, the Government are going further and faster to decarbonise transport by phasing out the sale of new petrol and diesel cars and vans by 2030, and, from 2035, all new cars and vans must be 100% zero emission at the tailpipe. Cars and vans represent one-fifth of UK domestic carbon dioxide emissions and accounted for 71% of domestic UK transport emissions in 2019. Ending the sale of new conventional petrol and diesel cars and vans is a key part of the answer to our long- term transport air quality and greenhouse gas emissions.
Electric vehicles present not only a huge opportunity to decarbonise transport but an important opportunity for consumers to contribute to the efficient management of electricity and to share the benefits of doing so. Smart charging will enable this. It enables consumers to shift their electric vehicle charging to times when electricity is cheaper and demand is low. It is a win-win, both reducing the need for costly network reinforcement and saving consumers money on their energy bills.
These regulations are essential to drive the uptake of this important technology and to enable the transition to electric vehicles while minimising cost to consumers. This instrument could deliver up to £1.1 billion of savings to the power system by 2050. Through it, the Government will deliver four key objectives for smart charging policy by driving consumer uptake, delivering consumer protections, helping ensure the stability of the electricity grid and supporting innovation.
The key provisions in the instrument are as follows. First, these regulations mandate that most domestic and workplace charge points sold in Great Britain will have the capability to smart charge, so that consumers can benefit from the savings this offers. Many home charge points already have smart functionality, so this instrument will work with the grain of the market and consumer behaviour to drive significant uptake of this technology and reduce the cost of the electric vehicle transition.
It is important to note that the instrument maintains consumer choice. It mandates that charge points must have the functionality to support smart charging, but consumers will still be in control of when they charge. They will continue to be able to choose the energy tariff that suits their needs and decide whether to subscribe to smart charging services. Some consumers may not engage with smart charging so, to encourage them to charge at times of low electricity demand, the instrument ensures that charge points are preset not to charge at peak times. However, and importantly, the instrument mandates that consumers must be informed and asked to confirm this setting during first use, and they must be able to edit it at any point in the future.
Secondly, these regulations establish new cybersecurity and grid protection requirements. The instrument embeds new and more robust cyber hygiene standards into smart charge points to help mitigate the risk that charge points are hacked and controlled to the detriment of individual consumers and the electricity system. It also requires a randomised delay function to prevent the synchronised switching on or off of large numbers of charge points—for example, in response to a drop in electricity prices. This will help ensure that smart charge points support the integration of electric vehicles into the electricity system and do not destabilise it.
Thirdly, the regulations set new requirements on how charge points monitor and record electricity consumption. This will help consumers to engage with their energy bills and usage, and ensure that a charge point is capable of supporting smart services. Many requirements, such as cybersecurity, electricity monitoring and the randomised delay function, align with standards developed with industry, mainly the British Standard for energy smart appliances, PAS 1878.
Finally, we are mandating that, in the event that a consumer switches their electricity supplier, their charge point must retain its smart functionality. This will ensure that consumers are not locked into a specific electricity supplier by their choice of charge point.
Noble Lords will note that the Government take an outcome-focused approach throughout the instrument and do not prescribe specific technical implementations. This approach will support ongoing innovation within the charge point market and help to maintain our position as world leaders in smart technology.
These regulations are essential to ensuring the successful uptake of smart charging technology to support the electricity grid and consumers in the transition to electric vehicles. I commend the regulations to the Committee.
My Lords, I support these regulations. As my noble friend the Minister explained, they apply to charge points intended for use by vans and cars in a domestic or workplace setting. When will we get charge points at our workplace setting, the Palace of Westminster? It would be good for us to lead by example. I looked at electric cars a few months ago but, when fully charged, it might have got me here—just—but not home again, so I had to buy a hybrid car, which was a pity.
I thank the Minister for her explanation. This SI certainly concentrates on one part of the EV charging market—the issue of smart charging and its interface with grid capacity—but there are considerable questions about the picture as a whole. I shall raise the issues of vans and of long journeys.
First, why does the SI exclude rapid charging points? They would be a reasonable investment for companies with small fleets of vans, for example, and those that come in at various times of the day needing to recharge. As the noble Earl pointed out, there is not a very long range on all the vehicles concerned. Recharging during the day in a half-hour window is therefore essential for many companies. I have sat in a queue at a motorway services where a van has used a rapid charging point. That was obviously essential to that person’s working day; he was using a van because that was his business—it was clearly a small company.
There is a lot of detail in this instrument on how exactly the provisions will operate. I was pleased to hear the noble Baroness talk about being able to change the settings and so on. I would like her assurance that it will be simple to change the settings, because it does not take too much thought to imagine a household where, for example, a district nurse works a day shift one weekend and a nightshift the next, so obviously in one week she will charge at night and the next she will charge during the day—and, on some of those shifts, she cannot pay attention to the cheapest rate for electricity.
I also want reassurance about the circumstances in which people find themselves. I have an electric vehicle, as the noble Baroness knows. I have solar panels. I have virtually no mobile phone signal in my house and very poor wi-fi on occasions—although they were digging up the road this week, so I have hope for an improvement there. My point is that we charge during the day, when the sun is out—or is at least up in the sky behind the clouds. It is easy for people to adjust in the light of their personal circumstances.
Paragraph 7.12 in the Explanatory Memorandum refers to cybersecurity, which clearly worries the Government, although I have not thought too much about it myself in this context, so I should be grateful for some more detail there. Paragraph 7.14 refers to Regulation 5, which invests the Secretary of State with enforcement powers and investigatory powers, including powers of entry and inspection. I welcome clarification. Is this only for companies selling and installing charging points, or is it something to which companies that have installed charging points may find themselves subject? It occurs to me that the technology of charging points is probably beyond many who have them installed, and therefore one could find oneself with a charging point that is not acting as it should without being at all aware of it. I am concerned about that.
Fundamental to all of this is the issue of grid capacity. National Grid came up some years ago with the figure of aiming that one should never be more than 25 miles from a charge point. Is that still its aim, because, if so, it is woefully inadequate? I invite your Lordships to substitute in your mind the idea that we should never be more than 25 miles from a fuel station for you to see that it is not sensible in anything other than, perhaps, the Highlands of Scotland. Clearly, we need far more charge points than that. That is the background to the current set of regulations.
The SI excludes public charging, as well as rapid charging. Because of the crossover between private households, small businesses and the need for access to public charging, I am interested in why they are excluded. The importance of having adequate numbers of specific charge points for commercial vans is something that the Government need to look at. Unless we enlist the positive support and co-operation of the commercial sector, both large and small, none of this will work as intended.
Finally, I turn to the next steps. We need something equally detailed for all the rest of the charge points which have been excluded from the SI. There are key issues, especially for people on long-distance routes. Are the Government convinced that the grid capacity at our motorway service stations is adequate to have banks of charging points? Motorway service stations are often in rural or semirural areas, where grid capacity is low.
The issue of disabled access has not been raised. The current design of charging points in public places is absolutely woeful for people with disabilities, either physical ones in terms of movement or visual disability.
When can we expect there to be more electric charge points? The latest figures from the SMMT show that just one EV charging point is being installed for every 52 new EVs registered. That is completely inadequate and there will not be the expansion of the sector we need unless that improves.
London has as many charging points as the whole of the rest of the UK. This really requires a strong steer from the Government if we are to get over the psychological problem that the noble Lord exemplified perfectly just before I spoke. We find where our local charge points are and very quickly work out how to use them. We work how our own vehicles operate and how best to maximise the range. We manage all that, but you talk to any EV owner and the first thing they mention is the range for long journeys. Until we can be comfortable with that, we are not going to encourage people to go for EVs in the large numbers that we need to.
As background, the impact assessment states in paragraph 1 that:
“In 2019, road transport accounted for 24% of all UK”
“emissions with cars and light commercial vehicles … accounting for 79% of this total,”
and that greenhouse gas
“emissions from transport have remained largely unchanged since 1990.”
The impact assessment then says in paragraph 1, as it does on a number of occasions elsewhere, “Error! Bookmark not defined” in bold letters. I would just like to ask what that means in paragraph 1 of the impact assessment I have and, indeed, in other parts of it. I take it that is an error but I would like to check what it means. Does it mean anything I need to be aware of or is it just a mistake?
With the ending of the sale of new petrol and diesel cars in the UK scheduled for 2030, the Department for Transport regards the transition to electric vehicles as crucial to achieving net-zero greenhouse gas emissions by 2050, with the electricity system having to be able to meet the increased demand that that will generate. Can the Minister say what the Government estimate the additional greenhouse emissions will be that will be generated by the increased demand for electricity arising from the transition to electric vehicles? This will have to be set against the reduction in such emissions arising from the phasing out of petrol and diesel vehicles?
As has already been said—and indeed is in the Explanatory Memorandum—most electric vehicles are expected to be charged at home, but the Department for Transport expects that without smart charging, this is most likely to happen during electricity system peak times when people arrive home from work. This would require, the EM says, “significant … additional investment” in the electricity networks and electricity generation capacity. Smart charging is intended to address this issue. Can the Government say in their response what the saving will be in these additional investment costs if there is a successful move to smart charging and what percentage of investment each year in electricity networks and electricity generation capacity that savings figure in additional investment represents?
With smart motorways and now smart charging, it is clear the Department for Transport has taken a fancy to the use of the word “smart”, but I would have to say that it did not figure greatly in the recent announcement on the backtracking on the northern powerhouse rail and eastern leg of HS2 commitments. As well as introducing a requirement for all domestic and workplace charging points to include smart functionality or charging, the regulations set out certain standards and requirements that smart charging points must meet. They also require a statement of compliance to go with every smart charging point sold, with penalties for selling a non-compliant charging point.
The Government estimate that 87% of private charging points sold or installed in this country currently have smart functionality. There is, however, the issue of accessibility of charging points for those who are unable to install a private charging point, not least those who do not have their own dedicated parking space at their place of residence. Could the Minister say how the Government intend to address this aspect of the issue of accessibility, and within what timescale?
Paragraph 7.6 of the Explanatory Memorandum says on interoperability that:
“The ability of consumers to freely switch energy supplier is a fundamental principle in the energy market. This instrument makes clear that a charge point should not introduce a new barrier to switching by being designed to lose its smart functionality when its owner changes supplier.”
What does not appear in the Explanatory Memorandum, as far as I can see, is an unambiguous statement that the instrument includes a requirement for all charging points to be interoperable. Could the Minister say in her response whether the wording in the Explanatory Memorandum to which I referred constitutes in reality a requirement for all charging points to be interoperable? I think the answer is that it does not, but I should be grateful for clarification on that point.
Paragraph 10.6 of the Explanatory Memorandum says that the Government have
“chosen not to mandate device-level requirements”
relating to demand side response interoperability
“at this time … because the smart charging market remains nascent, and because delivering interoperability would require broader powers than those set out in the AEVA”—
the Automated and Electric Vehicle Act 2018. That is despite the fact the Explanatory Memorandum states that:
“The ability of consumers to freely switch energy supplier is a fundamental principle in the energy market.”
The Government also say in paragraph 10.6 that:
“The Department intend instead to consider how best to deliver interoperability as part of a second phase of legislation, by looking at placing wider requirements on the entities … which could deliver DSR through charge points. Government aims to consult on this second phase of policy measures in 2022.”
That is a somewhat vague timescale, which contains no target date for actually legislating. Could the Government be more specific in their response today?
I also have a comment on the benefits and costs. Paragraph 12.3 of the Explanatory Memorandum says on impact that:
“The overall monetised benefits are estimated at £300m - £1.1bn up to 2050, primarily derived from reduced electricity system costs. The cost to industry of this instrument is estimated at £10 - £260m up to 2050”—
is that figure of £10 right, or is there an “m” missing after the 10? It continues that the cost is
“primarily related to product development costs to meet the requirements. The costs to industry are significantly outweighed by the benefits to the energy system and consumers, and this instrument has a Net Present Value of £0 - £1.1bn up to 2050, with a central estimate of £500m.”
As I understand it from these figures, there is in reality a very little gap between the highest cost figure to industry and the lowest monetised benefit figure. Perhaps the Minister could say whether she agrees or disagrees with that statement, but it seems to me to be the difference between £260 million and £300 million, looking at those two figures.
Paragraph 10 of the EM, on consultation, also says:
“The majority of respondents supported the Government’s overall aims and objectives for EV smart charging”.
Of course, it is not clear what “the majority of respondents” means. What did the minority—it could be up to 49%, by the way—say did not constitute support for “the Government’s overall aims and objectives”, bearing in mind that paragraph 10 says:
“Three material changes have been made to the original proposals as a result of the consultation”?
Finally, I want to comment on reviews. Paragraph 14.2 of the EM says:
“An interim process evaluation … will establish if these regulations are being implemented as intended followed by a separate impact evaluation in 2024-5 to assess how effectively the policy is meeting its objectives.”
When will that interim process evaluation be undertaken? Will it be published? Apparently, there is also a statutory review clause, with the first report being published by the Secretary of State before five years are up from the date these regulations come into force, which, as I understand it, is at the end of June next year. The Automated and Electric Vehicles Act 2018 also requires the Secretary of State to prepare a report every 12 months. That is quite a few reports; at least, it appears to be quite a few. Who will actually produce these various reports? Will their work be co-ordinated or conducted in separate silos?
My Lords, I thank the noble Baroness, Lady Randerson, for her consideration and the noble Lord, Lord Rosser, for his thoughts on the statutory instrument before the Committee. First, I apologise wholeheartedly for what was clearly an error in the IA, where it says, “Error! Bookmark not defined”. This should not happen; it will not happen again. It is deeply disappointing and I regret it enormously.
It is always good to be on the receiving end of some excellent questions from both noble Lords. I know now that I cannot possibly answer some of them, but I will write to answer all questions asked today.
We know that there could be a potentially significant impact on the grid. Current estimates are that, by 2030, EVs could account for approximately 10% of total electricity consumption, up from less than 1% today—so, well over 10 times where we are at the moment. This could increase the total energy demand by 2030 by 30 terawatt hours and by between 65 and 100 terawatt hours in 2050. So we know that there is a significant electricity requirement coming down the track. What this SI does, by introducing the smart charging concept and legislating for it, is enable the demand to be managed in a much better way.
Obviously, we need to ensure that electricity networks have sufficient capacity. This is the responsibility of the electricity network operators; they are incentivised to do so through the regulatory framework set out by Ofgem. However, let us be frank: if they need more capacity, it will end up being the citizen who somehow pays for it. Therefore, the extent to which we can manage demand is hugely beneficial. The noble Lord noted some of the savings that could be coming down the track.
The noble Lord, Lord Rosser, also asked about the impact of energy generation from non-renewable sources. I do not have those figures to hand but I will write to him. The Government have been quite successful in shifting our energy generation to renewable sources, which is a bonus and, indeed, a prerequisite of what we are trying to do to decarbonise our transport system.
We should be able to get some very significant benefits from smart charging by shifting demand. We estimate that we would need 60 gigawatts of flexible capacity to enable the net-zero electricity system. This could include more than 30 gigawatts of either short-term storage or appliances such as electric vehicles using energy in a smart way. So smart-charging EVs will likely play a very integral role in the future.
The noble Lord, Lord Rosser, mentioned consultation. I do not have the details about why people were unhappy, but it is the case that we have been working very closely with the industry and consumer groups as we have brought forward these regulations, so it does not surprise me at all that they have changed. We will continue to work with them as we continue to introduce regulations, particularly around interoperability.
Looking at the costs and benefits of these regulations, the noble Lord has pointed out that the range is wide, but I believe that we can safely say that this is a very beneficial piece of legislation. The impact on industry is a £130-million cost up to 2050; that is primarily related to product development costs to meet the requirements.
We are very much working with the grain with industry at the moment, so we expect that the cost of complying will vary depending on whether a manufacturer already offers smart devices or needs to upgrade non-smart models. However, given the rate of change, significant developments are expected to come down the track, allowing charge points to be produced on a far more economic basis.
Turning to the actual amenity and the people who will install these charge points in either their homes or their workplaces, I take the noble Baroness’s point about district nurses and different people with different shift patterns; they would need to understand this fully. Let me be absolutely clear: we are committed to educating consumers to make sure that they remain in control. As with anything, when you get a sophisticated piece of technology, you must read the instructions—unless you are a man—so she and I would clearly read the instructions and would know what to do. Of course we want to make it as easy as possible; there should be no barriers between setting up charge points exactly as they need to be set up, depending on your work or lifestyle. This is really important, and it is top of mind for us.
The noble Baroness, Lady Randerson, asked about cybersecurity. Right now, charge points are subject to general product safety requirements, but government does not regulate the cybersecurity requirements. We are aware that some charge points have cybersecurity vulnerabilities, so these regulations will improve the standard of the security of private charge points to give confidence to consumers that their charge points follow current cybersecurity best practice. These requirements align with the best-practice requirements set out in a globally applicable cybersecurity standard and DCMS’s code of practice for “internet of things” devices. However, we also know that cybersecurity risks will continue to evolve; we will of course monitor them and think about how we can intervene in the longer term.
I turn briefly to the intervention from my noble friend Lord Cathcart. My department is in dialogue with the Palace of Westminster about access to charge points. I have written letters to the powers that be in the Palace about them. I am reassured that, apparently, they are coming, but of course this is not a government decision. I agree with my noble friend that we should set an example, and I will continue to press for charge points in the Palace of Westminster.
Moving on, assurance is essential for enforcement and consumer confidence. These regulations require that a statement of compliance and a technical file be available to explain how charge points meet these requirements. They must be provided to the enforcement authority and the consumer upon request. These requirements are intended to deliver appropriate assurance without imposing unnecessary or disproportionate burdens on businesses. The Government have appointed the Office for Product Safety & Standards as the enforcement authority, and will ensure that it has the funding to promote and ensure compliance with the regulations. The OPSS is an established regulator with significant expertise as a national product regulator. The legislation includes a range of proportionate enforcement tools to support effective compliance, including civil penalties.
The noble Lord, Lord Rosser, made an important point about public charging points and accessibility. We are absolutely committed to ensuring that we have an accessible electric vehicle charging network and that inclusively designed charge points are available for all consumers. Obviously, work continues: we are working closely with the national disability charity Motability to commission the British Standards Institution to develop accessibility standards for public EV charge points.
I turn briefly to what is included and excluded. The regulations exclude public charge points. Domestic and workplace charge points account for the highest proportion of EV charging by far, and smart charging works best in those settings due to their long plug-in times. You therefore get flexibility in making use of the smartness of the charging point. However, we are separately exploring the potential for smart charging at public charge points—particularly, for example, where vehicles might be parked on the street overnight.
We have excluded rapid charge points because this is about shifting demand and making sure that electricity can be drawn down at cheaper times and when there is less demand on the grid. Of course, as the noble Baroness pointed out regarding her friend in a van, if you use a rapid charge point then you need to be charged right there, right now. You cannot be messing around. Having smartness attached to rapid charge points has potentially limited benefits because what you really need to do at them is turn up, plug in and, after 15 minutes, go. Any smart additions probably would not add anything to that.
There are many next steps because there is lots to do in this area and the Government are very ambitious. Phase 1 refers to the regulations that we have discussed today to establish baseline device-level requirements for smart charge points; phase 2 will look beyond charge points themselves and be concerned primarily with placing security and interoperability requirements on the systems and entities that control charge points, as well as on other smart systems and devices. At that point, we will look much more broadly: beyond the devices in people’s homes and into the system itself. We will consult on some more proposals in due course in 2022.