Economy, Energy and Fair Work Committee

Meeting date: Tuesday, January 28, 2020

Official Report 658KB pdf

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Energy Inquiry

Agenda item 2 is our energy inquiry. We have four witnesses with us today to give evidence. Neil Swanson is the director of the Electric Vehicle Association Scotland, Scott Mathieson is the network planning and regulation director for Scottish Power Energy Networks, Stephen Vere is the programme director of low carbon for the Scottish Futures Trust, and Ross Kirkland is the senior programme manager of technical projects for the Energy Saving Trust. Welcome, and thank you for coming in.

Before coming to questions from other committee members, I will ask a few questions about distribution networks. Whose responsibility is it to ensure that distribution networks are fit for purpose? What upgrades do we need? Who will do that?

As the network’s representative, it is incumbent on me to respond. We believe that it is our responsibility to prepare the network for the future—not just in relation to transport, but in relation to the coming changes in the heat system.

We are proud to be working with the Scottish Government in particular. A key document exists in Scotland that does not exist at Great Britain level. The document, “A vision for Scotland’s electricity and gas networks”, sets out the need for much more integrated planning across the transport, heat and network vectors to realise our zero-carbon targets.

However, we cannot do that on our own. Ultimately, we are a regulated monopoly. That is appropriate, because the business within which we operate is a natural monopoly and the consumer must be protected at all times. However, it is very important that our regulator, the Office of Gas and Electricity Markets, comes on the journey with us in order that we can achieve the goals of policy makers, including on electrification of transport.

The framework must incorporate—and recognise—the need for anticipatory investment. On the scale of the change on our networks that lies ahead, in line with the Scottish Government’s target, there will by 2032 be as many as 1 million electric vehicles on the roads of Scotland. To put that into perspective, if all those vehicles simultaneously used smart charging when the market was at its cheapest price, that would be more than double Scotland’s winter-peak demand on the electricity system.

There are huge savings to be made by operating a smarter network and by changing people’s behaviour—how they utilise vehicles and when they charge them—but there is a fundamental need for investment, particularly in the distribution system, to support electrification of transport. We are pushing very hard with our regulator for that in relation to the coming price-control framework—that is, electricity distribution 2, or ED2—which will begin to take effect in 2023. We think that that is too late and we are pushing very hard with the regulator on the need to recognise changes in the regulatory framework now.

If everyone suddenly had an electric vehicle and charged it overnight, could the grid cope?

That is clearly a hypothetical proposition. We do not want to be a barrier to people realising their ambition to own an electric vehicle, so we would look at behaviour change and when people use the electricity system in order that we could move demand around in time.

We often hear the proposition that price signals are very important in relation to behaviour change. We have to remember that use of the electricity distribution system costs the consumer 35p a day. It is very difficult to make significant and material price changes that would change people’s behaviour.

At the moment, if a person who applies for a connection for a charger wants two chargers, the approach to connection charging means that the consumer would recognise the difference in the cost of connection. There is no doubt that some things need to change in relation to charging, but those changes will not cause a big behavioural change.

If everybody had an electric vehicle tomorrow and switched on a charger that was linked to the grid, the distribution system in particular would definitely struggle. However, there would also be benefits for the grid. I point out that Neil Swanson, as well as representing the Electric Vehicle Association Scotland, is a transmission engineer. In Scotland, we have an abundance of generation, and congestion is one of the big issues that we have in transmission, so higher demand from electric vehicles would reduce the constraints on the transmission system.

The answer is not straightforward. There is no doubt that the distribution system, in particular the low-voltage system, would face challenges, but benefits would be realised across the integrated transmission and distribution systems by increased demand.

You asked whose responsibility it is to ensure that the network is fit for purpose. Scott Mathieson gave the broad answer that it is the responsibility of the Scottish and United Kingdom Governments, Ofgem and industry. It is the responsibility of all of us.

I point the committee to the Infrastructure Commission for Scotland’s report that came out last week, which highlights that we cannot look at electric vehicles and the grid in isolation. We also need to look at heat: the report said that we must consider heat along with surface transport generally when looking at the grid, because electric vehicles are just a small part of the load. For example, the Royal Society of Edinburgh’s report suggests that electric vehicle uptake could increase peak demand on the grid by 50 per cent, but other reports take a different view. For example, a KPMG report on heat suggests that if all domestic and commercial heat was electrified, peak demand on the grid would increase by 145 per cent. Heat is a big issue. In many ways, it is a bigger issue than electric vehicles, but we must look at both aspects together.

I have a daft laddie question. Why can electric vehicles not be self-charging?

That goes back to high school physics: energy has to come from somewhere.

Does energy not come from wheels turning?

Yes, but what makes the wheels turn? There has to be a source of motive power. If a vehicle is coasting down a hill, kinetic energy can be recovered, but it is necessary to have put energy in to get it up the hill. There was an original source of power—it must come from somewhere. There is no such thing as free energy.

So, the answer is that electric vehicles cannot be self-charging.

That is right.

I will need to go back to the drawing board.

I have a question for Scott Mathieson. According to Scottish Power’s submission,

“successfully delivering Scotland’s net zero target will require more collaborative and creative approaches from Ofgem, industry and government alike.”

What might those more collaborative and creative approaches look like?

The approach needs integrated planning, which must involve central Government and local authorities.

Is there any sign of that?

Yes; I am encouraged by what is happening, and I was going to mention an example. We are working with Transport Scotland on a project with two local authorities—which I cannot name at the moment—with a view to ensuring that we can provide public charging infrastructure in those authority areas. That will result in an increase of about 25 per cent in the number of chargers that are registered with ChargePlace Scotland Ltd, which is not immaterial; the councils in question are big authorities.

We are looking at transport planning alongside grid planning. As well as looking at the types of vehicles on the road and the journeys that they will make, from domestic to commercial, we want to make sure that there is clear public access, including for consumers who live in multi-occupancy dwellings and who struggle with off-street parking. The advantage of working with the transport planners and local authorities is that we can align provision of access with grid capacity and ensure that we minimise the costs of grid reinforcement for delivering that. There is clear evidence that integrated planning is taking place.

Stephen Vere raised a good point: the heat vector must also be picked up. We do not want to lay cables in the streets multiple times; we need to think about heat and transport together.

There are good examples. I mentioned “A vision for Scotland’s electricity and gas networks”, which is a very important document, and is unique in the UK. I wish that we could get the same from the Department for Business, Energy and Industrial Strategy. That document recognises that networks have an extremely important role to play in supporting our transport and heat ambitions.

Last week, I attended a networks leadership group, which included representatives of consumers, National Grid, the transmission system and both the Scottish distribution businesses—Scottish Power and Scottish and Southern Electricity Networks. It is vital that we bring people together in that discussion, as well as having actual integrated system planning across transport and networks.

Are you happy that that is heading in the right direction, at the moment?

I think that a small step has been taken, but I would like the pace to pick up. If we look at the economic projections for electric transport, we can see that it will become more economical to purchase electric vehicles in the next two to four years. We believe that, if we are to realise the ambition and the required rate of change, the pace needs to pick up significantly. The party that is coming to the table a wee bit late is Ofgem, which has a role to play in facilitating the change that we are talking about.

Why is that?

There is a great deal of uncertainty. As Stephen Vere touched on, this is an area in which policy makers could provide greater clarity. At the moment, no statutory instrument is being put in place for the regulator. Scotland is a leading powerhouse in the growth of renewables; we have decarbonised our energy system, ahead of heat and transport in a way that has not been done anywhere else on the globe. It is a real achievement that we are leading in that area. One of the reasons is that statutory direction was given to the regulator about its role and responsibility in delivering the future energy system on the power supply, or generation, side. We need the same to happen on the demand side for transport and heat.

My next question leads on logically from what you have said. What would a regulatory framework that was fit for purpose look like?

First and foremost, the consumer must always be protected against uncertainty. The debate about stranded assets often comes up, but I have yet to see a stranded asset in Scotland or the UK. I see assets that are heavily congested, despite the rate of investment in infrastructure that we have delivered.

When I started in our business, we had in Scotland 850MW of transfer, or export, capability on our transmission system. We are now sitting at 6,600MW of transfer capability, and we still have congestion on the system.

10:15  

The regulator must therefore move beyond the stranded assets. Better planning should provide better certainty. We hope that the regulator will work with us on that, in order to protect the consumer. An anticipatory investment mechanism is required, examples of which exist for transmission, but they have not been extended to electrification of transport. There is a meeting—

I am sorry to interrupt. From what you are saying, you seem to expect that Ofgem will take the lead on driving that, from a regulatory point of view. I am not sure that that is evident.

I expect Ofgem to be a partner. We do not think that it, uniquely, has the solution. In renewables in general, the industry has worked with the regulator on what the solution and the framework should look like. There are good examples, especially in the renewables world, that have, through anticipatory investment mechanisms, facilitated renewable generation. One such example in the distribution system, which was called the distribution generation incentive mechanism, allowed businesses to build, ahead of need, for supply and production of energy on the distribution system. However, at the moment, nothing similar exists in the demand side of transport and heat.

I will bring in Stephen Vere, then Richard Lyle has a brief question.

A few questions have been asked. On collaboration, I point out that it is important that, when infrastructure is being planned, we understand at that stage its likely cost and the cost drivers. For example, if it is intended that electric vehicle charging points will be rolled out, it is important to understand the cost of their connection to the grid. If there are options to put charging points in different places, it is essential to know how much each option will cost, because that will inform the decision on where they should be put.

One of the current challenges is that, understandably, there is a requirement on distribution network operators to treat everyone equally. However, that means that, at the planning stage, a local authority might find it difficult to get key information on costs and drivers, or the process might be slower. As Scott Mathieson mentioned, what is required instead is for the strategic partnership to work with the distribution network operators in a collaborative and iterative process, so that everyone can understand the costs and make informed decisions based on them.

My other point is in response to the question on responsibility. It is the responsibility not only of Ofgem but of all the UK and devolved Governments to work collaboratively. The problem cannot be solved by one organisation alone.

I have a question for Scott Mathieson, on charging points and parking. I am also a member of the Rural Economy and Connectivity Committee, at which I have for many years advocated that new homes—regardless of whether they are being built privately or by councils—should have charging points installed during construction. In tenemental properties in Glasgow, Edinburgh and elsewhere we are going to have a problem with people who want to charge their cars hanging charging leads out of their windows. How will we solve that?

We have to tackle it. Multi-occupancy dwellings are one of our biggest challenges. We need public charging infrastructure. Another reason for our having chosen to work with the two local authorities that we have chosen is that we recognise that such properties present a major challenge that the grid will have to face.

We set out with a target of 90 or so sites being required in those two geographic locations. Through grid and transport planning, we have been able to cut that down to about 45 to 50 sites. They include a range of chargers from 22kW to 50kW, which allows us to match them against grid capacity, to see where such capacity can be delivered efficiently and quickly.

I know that we are up against time, but I will just ask this quickly. If you go along any street in Glasgow—Duke Street, for example—or any street in Edinburgh, you see cars parked nose to tail. There might be 40 cars on an average street, so we will need 40 chargers, will we not? If not, what will we need?

We do not necessarily need 40 chargers. We need to look at the capacity and capability of the chargers, but we also need to consider hard behavioural change. One of the key things that we need to look at is how we ensure that people do not hog the chargers and that they are reused by people on those streets.

One of the big challenges for urban environments, in particular, is reducing the level of congestion on our streets. It is as important for me that everybody has universal access, not just those who own a car. Let us not ignore those who rely on our transport system. The issue is not just about the cars that are parked on the streets.

Two weeks ago, we delivered to the Caledonia depot the first electric bus in the Glasgow area. There are 365 buses using that depot, which is right in the heart of the Gorbals. The first bus route that we delivered goes through Possil and Springburn, which are among the poorest and most deprived areas in the city, so it will be an important public transport artery in those local economies. Those 365 buses will require anything between 100kW and 280kW chargers, which will create 8MW to 16MW of demand on a network that currently has 2MW of demand. We can deliver the capacity for that bus depot to operate, but not without an anticipatory investment mechanism in place.

I draw your attention to the Infrastructure Commission for Scotland’s key findings report, “A blueprint for Scotland”, which Stephen Vere referred to. It said that, by 2021, the Scottish and United Kingdom Governments should develop an appropriately devolved regulatory framework—one that does not just go at the average pace of the UK but really recognises Scotland’s ambition. That is an important point, as we are running ahead of other parts of the UK. The report also says:

“By 2022, the Scottish Government, local authorities, regulators and industry should work together to establish ... incentivisation mechanisms and a route map for the transition to net zero”.

That concept of integration in our planning is vital, as is the need for the regulatory frameworks to move at pace.

The electric vehicle energy task force highlighted the urgent need for the Government and Ofgem to

“facilitate effective ... planning and coordination of the rollout of EV and electricity network infrastructure at a national and local level”.

The type of work that we are doing with the two local authorities that I mentioned is unique in the UK; no other network operator is doing it. We are doing it for the UK in conjunction with colleagues at Scottish and Southern Electricity Networks. We are dealing with not just the urban issues but the e-tourism issues. If we look at Portree, we see that its population can treble or quadruple in summer. People will also need access to charging infrastructure in island and rural environments. That is vital for our economy as a whole.

I totally agree with Scott Mathieson and Stephen Vere that heat and transport need to be considered together. I would just add that, in my experience, communications networks go hand in hand with those things, as they need to be co-ordinated and able to communicate with each other.

On the collaboration theme, the Energy Saving Trust is working with 11 local authorities throughout Scotland, from Dumfries and Galloway in the south to Orkney and Shetland in the north, on the shared issues of how much public infrastructure is required to meet the needs of different groups, such as those who do not have access to off-street parking of their own. We understand that DNO costs for upgrades or potential upgrades are a vital aspect that we need to consider, and we are open to engaging with DNOs and are trying to do so at the moment. We all agree that there has to be a collaborative approach.

Scott Mathieson made a good point about buses, and I thought that it would be appropriate to say that, when we are considering public charging infrastructure, we should also consider what I would call the transport hierarchy. I know that the committee is looking at local energy and electric vehicles today, but we should consider electric vehicles in the wider context of more sustainable travel options such as walking, cycling and public transport.

We support that point about the transport hierarchy. When we are looking forward at where such vehicles will be charged, we should remember that, in the next 10 to 20 years, we will see the growth of autonomous vehicles, which could reduce the need for ownership in tenemented apartments. That type of vehicle will impact on what we install and how we manage charging. It will be another game changer. To go back to anticipatory investment, we need to think about how we manage that. If people have fewer cars but they are driving themselves around, we need to consider how and where we charge those vehicles. The same will apply to buses.

I have one final question. Have Ofgem and the UK Government indicated that they want the forthcoming price control framework to deliver the transition to net zero?

Ofgem has certainly recognised that in its recent consultation documents. We had to write to Ofgem to say that the 2045 target, which is legislatively important in Scotland, needs to be recognised as well as the 2050 target across GB as a whole. We serve Merseyside and North Wales as well as Scotland, and the metro mayor in Merseyside has a different set of targets for that area. The problem is that waiting for the next price control will leave until 2023 decisions that need to be taken now. We are therefore arguing that Ofgem needs to respond in the interim, during the current price control, rather than wait for the next one, which will take effect on 1 April 2023.

I believe that, in the next month or two, a statement is due from Ofgem about its commitment to net zero—I think that the chief executive officers of the DNOs are being briefed today, so I will find out what has been said when I return to the office. Ofgem has certainly recognised the issue. In the last quarter of last year, we saw a big change, but I expect more changes.

I have questions about the charging network. I presume that the answer to the question about who is responsible for that network is similar to the answer to the question about who is in charge of grid upgrades, in that it is sort of everybody, so I will take that as read unless anyone has a different view.

The roll-out of the charging network has been variable. Dundee City Council, for example, has been praised for its infrastructure, but that of cities such as Edinburgh is poor. How do we ensure that a consistent and reliable network is developed across the country?

One issue is that we need some sort of coherent guidance for local authorities. The Government is providing them with funding through Transport Scotland, but there is not enough direction on how to assess the issue—they are very much left to their own devices. Dundee City Council has a particular model for dealing with air quality issues in the volcanic bowl. That is specific to Dundee. East Lothian Council has taken a different approach, which it is supporting individual communities to drive forward. It is also engaging with companies to do geospatial assessment of who can and cannot charge at home, which it will use as the basis to model its infrastructure roll-out.

There is no set framework for councils to work with—they are very much on their own. We can offer them advice as drivers, based on what we see when we are using the network, but it is difficult for us to offer local authorities a clear evidence base without some framework to drive that.

Are you saying that Transport Scotland is providing funding to local authorities without providing any guidance as to how it should be used?

Ross Kirkland is probably better placed than I am to answer that.

I am involved in the switched on towns and cities programme, which works on feasibility studies and is designed to provide local authorities with expert resource to look at the issues. It is perhaps not good to use a broad-brush approach, as there will be regional variations that need to be taken into consideration. However, there are certain skills and methods that we can help local authorities with so that the approach is largely similar. We are now in the second year of feasibility studies, and there is potential for a third round next year. By then, we should have provided local authorities with the tools to develop their own processes.

10:30  

It is worth putting the issue in perspective. Scotland should give itself some credit. In November 2019, the Department for Transport released a table of charging points per 100,000 of the population. Scotland came second, with London coming first. Scotland had 32 charging points per 100,000, London had 49, and Yorkshire and Humber were at the bottom of the table, with 12. However, we cannot be complacent. A lot needs to be done.

Right now, the public charging infrastructure is largely delivered by local authorities, which, like all government, including central Government, have budgetary challenges and limited resources, so the development of charging points definitely needs to be prioritised. However, as Ross Kirkland said, expertise and resource are also needed to future proof the charging network for the growth in electric vehicles.

To add to Stephen Vere’s point, it is important that we recognise the good work that Transport Scotland has done, in particular through ChargePlace Scotland. The statistics show that Scotland is leading across the UK in that respect. We serve Merseyside and North Wales, and we can see a distinct difference in charging infrastructure between the territory that we serve south of the border and Scotland. I mentioned the PACE—public access charging for EVs—project, which we are working on with local authorities.

Is that the strategic partnership?

It is, and it is called PACE. It is designed to improve the distribution across the network, which we want to be accessible by all, including those in multi-occupancy dwellings and small commercial industrial players. We are trying to complement the resources that local authorities have for planning, and both our colleagues have identified an important point: a lot of the responsibility for this work sits with the local authorities. If 22 local authorities are trying to increase the number of charging points, how do we co-ordinate that in a sensible way at the national level? Equally, how do we make sure that they are supported and equipped and able to resource up to deal with the coming change?

My point partly reiterates what Scott Mathieson said. We have been approached by local authorities who are encountering the same problem. They are developing a large asset base, and it is only sensible that the free charging that has been a draw-down on their revenue is coming to an end. However, at the moment, that work is usually done by local authority staff as an extra function, not as their day job. It should not be an extra function, but a dedicated full-time job, as a dedicated person is required to drive it. Local authorities cannot meet that revenue cost. The development of the charging network is not being driven in a way that they can properly support at the required level. We have the assets, but the support within local authorities to maintain and promote those assets is a different challenge and one that we might need to step up to more.

You have talked about the hogging of charging points, but also about London and Scotland having a high level of them. Do you have any figures for the percentage of time for which charging points are used? I imagine that although London might have more charging points, its charging points will be a lot busier.

That is a challenge. Dundee has the biggest functional charging hub in Scotland, and its utilisation sits at about 10 per cent, which is an interestingly small number, although the situation will have changed since that figure came out last year. With the chargers, that facility is using less than half the available capacity of the substation, which was sized for it. There is a learning curve there.

Charger usage will vary from place to place. On the electric A9, the chargers are fairly busy, but if you travel down to the Borders and drive up to a single charger point, you can be comfortable that nobody will be using it, because the infrastructure is not quite giving people the necessary confidence. That is coming, and it is coming fast.

Is an estimate available of the per-mile cost for the infrastructure? You mentioned the A9, which is the planned electric highway, and there are other roads, such as the A96, that are being upgraded. It is not just a question of putting in the charging points; the space needs to be provided for them.

Transport Scotland or EST might be able to provide a figure, but I am not aware of one. If the charging points are put in, people will stop and charge. We want them not just to sit in their cars but to engage with the local community. If they only buy a packet of Polos, that is still a win, and the opportunity is there to get them to do more and to explore the local area. When it comes to what we want to do, it is quite a mixed bag.

Apple recently said that it was going to change the Lightning charger and lots of people were stung with Betamax. Are we at risk of investing heavily in the infrastructure and the current charging technology, only to find that the technology in 10 or 20 years’ time is different and better?

No. The current standard—the type 2 charger—is now mandated for all European manufactured vehicles, and most imported vehicles come with it for alternating current charging. There are two standards for direct current charging, both of which are covered by the European standard. The bulk of European manufacturers use the combined charging system. China and Japan maintain CHAdeMO, but the majority of cars will go with CCS.

There might be changes with things such as inductive charging; members might have seen the trial for taxis in Nottingham that was announced a couple of weeks ago. Inductive charging has been going in Norway for a wee while, and East Lothian Council is looking at that type of thing. That deals with a specific set of problems, but it adds a cost to the vehicle. Companies such as Connected Kerb are looking at the use of 5G networks with charging. However, the basic connective charging process is not likely to shift.

We have talked about upgrading the grid and the need for a lot more charging points. Does anyone have a ballpark figure of how much they will cost?

I do not have a figure, but last year the UK Committee on Climate Change suggested that the cost for charging infrastructure in the UK—not for the grid—by 2050 could be £9 billion. This sector is not short of statistics, and they are all different, so I would not put massive weight on that figure, but it is as good as anyone can come up with.

In Scotland in the medium term, we are looking at £200 million to £300 million for grid infrastructure to support the public charging infrastructure. That assumes a 40 per cent saving from doing it smartly—releasing capacity on the grid and changing people’s behaviour—so the cost could be 40 per cent higher if everyone wants full access.

On the point that was made about uncertainty, we recently put a case to the regulator to invest £42 million to facilitate the installation of monitoring on the distribution system to give better learning and understanding of how EVs impact the grid. It would have been recovered over 45 years at a return of less than 4 per cent and would have cost consumers 2p annually. However, the regulator refused the submission; it would have been a huge step forward for physical engineering learning and allowed us to provide greater certainty on investment requirements.

We have looked at the upgrade of the grid in Scotland, using estimates of the charging infrastructure that would be required and taking into account the additional electricity consumption resulting from the transfer of people away from diesel and petrol, and we have found a saving of about £1,000 per annum on the average family’s gross domestic product. Even if a large slice of that was taken to replace fuel duty, it is still a material prize to go after. The switch from petrol to electric looks to make a saving for family budgets—that is an important point. The issue is not just about one dimension—investment in infrastructure to support the transformation—because there is a saving in another dimension. Our energy planning needs to take account of that transfer.

I accept that there is that substantial saving in the short term. However, you have identified two large areas of investment that are required. Figures from the Office for Budget Responsibility show that the UK Government gets £6.5 billion from vehicle excise duty, from which EVs are exempt, and £28 billion this year from fuel duty, plus the 20 per cent VAT on top of that, which takes it up to £34 billion. That is a total of £40 billion that comes from petrol and diesel vehicles, which is 5 per cent of the UK Government’s income.

In the short term, there is a saving, but how do we get the £9 billion that is required for electrical charging across the UK? We need something in the region of £3 billion for grid updates, if we take your Scotland figure and multiply it by a factor of 10. However, we are going to be losing £40 billion of income. How do we balance that? Who pays? Who contributes in order to make those economics work?

Those are valid points, as there undoubtedly will be a big loss of fuel duty. Although there is VAT at 5 per cent on electricity, there will be a big gap.

We have talked about utilisation, and in future private sector investment should be possible in the area, so the numbers that we are talking about do not necessarily all have to come from public sector funding or finance. There are likely to be areas such as workplace charging and destination charging—charging outside, for example, a pub or restaurant—where the private sector will invest. Right now, that sector is investing with the recognition that it will make a loss, but it is investing for the future. In future, the private sector will invest because it will be confident that it can get a return.

However, in order to get that cultural change, people need to see the benefit. If we strip out fuel duty, the cost per mile of using a petrol vehicle, based on 35 miles per gallon, is roughly 7p. According to figures that I have been given, it costs £8.40 for a 200-mile charge overnight, which is roughly 4p a mile. The average saving for a family is £336 a year. An e-Golf electric vehicle costs £31,000, but the petrol vehicle version costs £23,000. That is an £8,000 increase—a third of the total—and the payback per year is only £336. For an ordinary family, the economics do not appear to work.

There is a high technology price at the moment because of the relatively low uptake. As I mentioned, most consensus forecasts are that, by about 2023 or 2024, it will be more cost effective to purchase an electric vehicle. Of course the price is higher at the moment because of lower adoption rates.

Taking a step back to look at the work that we have done, we would say that the saving for the average family is about three times the value that you quoted, which I think would provide some headroom to look at a new form of fuel duty. Equally, are we going to say that the issue of replacement of fuel duty is a reason not to tackle climate change? We have to recognise that there will be other benefits from the transition. For example, there will be health benefits from lower emissions in city environments. Certainly, anyone brought up and living in Hope Street in the centre of Glasgow is living in one of the worst areas for pollution in the whole of Europe.

Do not get me wrong, because I agree with you that the climate change aspect has to be tackled. However, I do not think that it is helpful for it to be said in a written submission to the committee that

“an EV could provide a customer with ‘fuel’ savings of over £1000”.

In the very short term, that is correct, but if the Government has to find a way to backfill the loss in excise duty and fuel duty, that £1,000 is not reality in the long term.

I commend the Scottish Government for another piece of work that it is doing that I think is vital, which is the just transition work. With the development of the low-carbon future in the heat and transport systems, from apprenticeships through to engineering, technical and planning resource, there is a huge opportunity for GDP development if Scotland takes a leadership position, which is why Stephen Vere’s points are important. That is well beyond the grid infrastructure area in which I work.

We did an important piece of work with the University of Strathclyde through which Professor Karen Turner, who might be asked to give evidence to the committee in future, highlighted that effective planning of infrastructure delivery to support the electrification of transport and heat systems could deliver 0.5 per cent growth in Scottish gross domestic product. Growth could be delivered if infrastructure delivery is properly planned. If we leave it and become reactive, and if electrification is a shock to the economy, that will increase the overall cost.

10:45  

I have questions about the charging infrastructure. A couple of committee members met electric vehicle users in Stirling, who told us that there are problems with the ChargePlace Scotland app and its back-office functions. We heard that there is a lack of reliability and a lack of certainty about whether chargers can be used, even if the app says that they are working. How can we resolve that? At the moment, someone who uses a diesel or petrol vehicle can be confident that if they go to a filling station they will be able to fill up with fuel—that is rarely not the case. We need people in electric vehicles to have the same confidence when they are travelling about.

The contract to run the e-mobility service provider—the back office for ChargePlace Scotland—is going out to tender. It is a very competitive marketplace, and there are interesting products out there. The back-office provider does not own any of the hardware; the hardware belongs to the charge point operators, who are as frustrated as drivers are, because they are not always able to see whether their asset is working and in a position to generate revenue.

We have driven a move to a more integrated back office. With Transport Scotland, we have pushed for additions to the contract to make the system more visible and more reliable for the end user and to bring in interoperability and the ability to roam across different networks. A person should not need a card for every network that they use; it should be as simple as driving up, plugging in, swiping and charging, with the payment appearing on the monthly bill. With some modern cars, the driver does not even need a card.

Contactless payment gives an ad hoc version of the same access and is now mandated on all new rapid chargers but, on the broader network, one card and roaming are the way to go. High-end cars such as Tesla vehicles have on-board sat nav that can tell drivers the state of charge points nearby, and we will begin to see more cars with such technology, which will give consumers a lot more confidence.

On the issues to do with the app and the mapping, we just need the system to be updated and brought up to a more modern standard.

How long does the contract last?

Until July.

You said that the contract is going out to tender. How long will the new contract last? Will it be two, three, four or five years?

I think that it is a three-year contract, with the potential for two single-year extensions.

At the moment, the free charge place, or charge point—this charge stuff—[Laughter.]

Free power.

It is free at many places. Who pays for that?

At the moment, the charge point owner pays, whoever it is. On the ChargePlace Scotland network, there are more than 250 charge point owner operators who pay for the energy that is consumed. The bulk of the charge points belongs to local authorities.

Local government is paying for the electricity that people use.

Yes.

That is not sustainable, is it?

God, no.

When will that end?

It is beginning to end. For example, Dundee City Council now has a tariff for visitors to the city, although residents continue to benefit from free charging in the city. Fife Council will bring in its tariff this year. East Lothian Council’s comes in in March. The City of Edinburgh Council has announced its tariff, which is also due this year. Moray Council has always charged. Highland Council is looking at the issue. Orkney Islands Council brought in a charge last May. Charges are gradually being rolled out, but we are not seeing universal application of tariffs, so it will be a lot more expensive to charge a car in Edinburgh than to do so in Dundee or Orkney.

We talked about charger hogging. We have issued a guidance document, which is available on our website, for anyone who is thinking about implementing a tariff, to encourage them to give a behavioural nudge to get people to use the right assets in the right way. For example, they could apply overstay fees so that, if someone uses a rapid charger for more than 45 minutes, they are told, “You have stayed too long, so this will cost you extra.” There would be not a penalty but a fee for staying too long, to encourage people to move on quickly. From the asset owner’s point of view, that means more turnover and an improved revenue stream.

That is what is needed in order to get people to use the right charger. If they need a slow or small charge, they should use a lower-powered unit. If they need to charge quickly, they will pay a premium to get the higher delivery rate. The owners have invested in a £50,000 asset in the ground; they cannot have the same charge on each.

As charging becomes more commonplace, so do fees. Could local authorities begin to generate a modest amount of revenue from charging points?

Yes. However, I see it being used to let them organically grow their network without running at a loss, and potentially to support staff to look after the network.

Electric vehicle charging is not necessarily an area for local authorities to make significant revenue. As Andy Wightman rightly identified, the electricity is a cost. It is a relatively small cost, partly because of the number of electric vehicles and how much the charging points are used. Going forward, it is important that we charge a tariff, because it makes it a more commercial proposition. When it comes to the level of service, as Neil Swanson mentioned, interoperability is key. Once people can turn up and use different charge points, if there is private sector investment, there is the potential for an element of competition, which tends to raise standards.

My question is on a similar topic. Another issue that we discussed at the EV summit in Stirling was the need for more information to be given to consumers to encourage behavioural change. There is a concern about range anxiety. There is also a misunderstanding about the relative costs of running an EV and the potential cost savings. Behavioural change, such as charging overnight rather than charging when people get back from work, can bring relative cost savings. Are we doing enough to educate the public about EVs and their benefits and about range anxiety?

The Energy Saving Trust works through the home energy Scotland network to provide consumers with independent and impartial advice on a range of technologies, including electric vehicles and heating and building efficiency. Across the rest of the UK, we work through the go ultra low programme. We have done that in many ways, such as community engagement events and speaking to people on the telephone. We also engage with local authorities and sit down with local interested parties to discuss those issues. We put a lot of content on our web page to provide people with information and address the barriers that Dean Lockhart is talking about.

As Dean Lockhart said, we need to do more in the areas of behaviour, understanding and cost, but another aspect is the people who install the equipment. We are talking about electricity infrastructure being installed behind the meter, so we need to ensure that the process is safe. In most domestic premises, there is a point of isolation that is about 18kW. A shower will use between 7 and 9kW. If the hob and the oven are connected at the same time, that will use 6kW, which takes it up to 15kW. If a 22kW electric charger is plugged in—and perhaps another electric charger—that goes significantly over the rating of the asset. Therefore, a strong piece of work needs to be done to ensure that the infrastructure is co-ordinated in such a way that it is safe, not just in domestic premises but in the streets.

That goes back to the point that was made earlier that it is not just about a maintenance contract for three to five years; it is about what the maintenance operation and the licensing regime look like. More needs to be done in relation to socialising all aspects of the infrastructure.

Stephen Vere can come in briefly—I am conscious of the time.

I am very much for more education. One of the points was about the vehicle. Until recently, if you walked on to a garage forecourt, they would try to push you towards a diesel or petrol car, because that was what they had in stock. When people walk in, they are offered a deal, and evidence says that electric vehicles are not brought up in the conversation unless people specifically ask about them.

Earlier, Andy Wightman raised the issue of the cost of electric vehicles. They are undoubtedly more costly at this point, but if we look at the whole-life cost of the vehicle—by which I mean the purchase price, leasing cost, fuel cost, insurance, funding cost, tax and fees, maintenance and the sell-on cost—the picture is not so clear. However, people see only the up-front cost right now, so we need to educate people and ensure that they have access to funding arrangements that allow them to purchase such vehicles.

I have a question for Neil Swanson.

The first electric car that I used, which was when I was on the Rural Affairs, Climate Change and Environment Committee, ran for about 100 miles. Electric cars now run for about 250 miles. Have you seen the Daily Mail report on the former Royal Navy officer turned inventor, Trevor Jackson? Is it the case that he has developed an incredible electric car battery that lasts for 1,500 miles?

It might be the case, but it is a disposable device and, effectively, a resource user. When the battery is flat, you have to get a new one.

So you would need to buy new batteries all the time. Oops.

Yes. One of the great things about batteries is that they are largely recyclable. I know that some members of the committee have spoken to Euan McTurk, who talks about that issue at length. Before a battery is recycled, it can be reused. However, Trevor Jackson’s battery is for one use.

Are you saying that his battery can be used only once?

Yes.

What are your views on the impact of electric vehicles on the rural community and environment? As you know, garages and petrol stations are often the hub of small villages, and they are about not just fuel but services, retail and even banking. Will you look into the near future and paint a picture of what Scotland might look like? Will such garages disappear? Will they have to repurpose themselves to become something entirely different?

They will become different. They might provide charging. We and the EST encourage businesses to engage with the issue. They do not want people to stop, charge their vehicles and leave. They want them to charge and perhaps have a meal or a snack. We will still have garages that sell such things, but they will no longer provide fuel. There is potential to grow the local economy, because people will stop and, while they charge their vehicle, they might explore and do more in the community. It is a potential area of growth for local economies.

I presume that fuel companies own most garage forecourts. What is their interest in maintaining the infrastructure if they no longer sell fuel?

It is fairly clear that most forecourts make money out of the products that they sell in the shop, not out of the fuel. The balance is a little different in rural areas, but having the EV infrastructure in place will potentially reduce their overheads, as they will not need to have fuel delivered, in the conventional sense, although there will be network issues, as Scott Mathieson pointed out. We might move from having conventional forecourts to having enhanced local shops, which will benefit local communities as well as drivers.

The fuel companies see this coming, so they are looking at not just the future of rural communities but their own future.

Willie Coffey made an important point. The challenges in rural communities are different from those in cities such as Dundee and Edinburgh. There is a need to look at how we channel our support and direct it to the areas where it is most needed and where charging is less likely to be delivered commercially.

During our discussion, I have been looking at the ChargePlace Scotland website and it looks as though there are charging points all over the country. Are you okay with what is being done in rural communities to ensure that they are not left behind, as they often are?

That is a big anxiety. There are many private providers of charging infrastructure beyond those that ChargePlace Scotland is focused on. Companies such as Ecotricity provide chargers under a merchant model in such areas in Scotland.

Our big anxiety as a network provider is that, as we know, our service has to be universal, whether we are providing it in a rural community or an urban environment. How do we ensure that the charging infrastructure is the same? That point has to be dealt with. We have chosen to run our project in two local authority areas that contain rural areas as well as conurbations, in order to test that proposition.

11:00  

I return to a vital point that was made earlier about a just transition. We cannot think about how we did things in the past with fuel stations; we have to think about the fitters, the installers and those who will maintain what will be a much larger proportion of infrastructure in our rural communities. The value of electricity, if it is used for heat and transport in rural communities, will grow, and that will provide employment opportunities for those who fit, maintain and secure that infrastructure in local areas.

On the European dimension, I think that Neil Swanson said that type 2 chargers are commonplace across Europe.

Yes. Type 2 is the mandated alternating current charging standard for cars that are manufactured in Europe.

So people would not have an issue in terms of their ability to use their cars throughout Europe.

Not currently, no.

As the technology develops, will attempts be made to keep pace and maintain close connections with what is happening?

Because the car-manufacturing base is largely outside the UK, that will remain the case. For example, Jaguar Land Rover’s electric vehicles are manufactured in Hungary, so it is mandated that they will be manufactured with a type 2 charger. CCS is an option, but the AC charger will remain constant.

Worldwide, there are only really two functional standards for charging vehicles: type 1, which applies principally in Japan, and North America—the United States and Canada; and type 2, which applies almost everywhere else.

My initial questions are for the Energy Saving Trust. I am interested in some data—if you cannot supply it today, please send it in writing to the committee.

In 2017, 7,509 EVs were registered. How many of their owners benefited from an interest-free loan? Do you have indicative figures for registrations in 2018 and 2019?

I do not have an answer to your first question, but I should have the answer to the second one.

The indicative figure for 2019 is a total value of £45 million—that is for ultra-low emission vehicles, including battery electric vehicles, plug-in hybrids and some range-extended vehicles, costing up to £35,000. That is forecast to be the equivalent of more than 1,300 individual vehicles, some of which will be taxis and private-hire vehicles.

Would it be possible to get a breakdown? If I, as a vehicle owner, wished to switch, how would I know about your services? Would I perhaps not be able to find about them, in which case I would just march in and buy a vehicle myself? How many vehicles have you provided interest-free loans for? What types of vehicles are involved? Are they taxis or private cars? What is the context in terms of the overall number of registered vehicles? That information would be useful in allowing the committee to understand the dynamics.

On how an EV loan scheme would work for second-hand cars, there are some practical things to consider. For example, how long would it take for a loan to come through for someone standing on a garage forecourt, about to buy a car?

The specifics around loans for used vehicles are still being discussed with Transport Scotland. I cannot go into any detail on that now, but the point is being considered. We should have more detail available in the next month or two.

I think that the committee would be interested to receive that.

Does the panel have anything to suggest to inform the thinking about how a second-hand scheme would work?

We have spoken to dealerships, and one of our members specialises in selling second-hand electric vehicles. The big issue for the dealers is that they need a quick turnaround on the loan. Most of them will accept seven to nine days. However, they are now at the point where they can sell the car off the forecourt for cash surprisingly quickly.

We need to support the people who need an interest-free loan in order to achieve the purchase of an electric vehicle, for whom a personal contract purchase is not always an option. That would open up a huge market in which we deliver electric vehicles to the people who will benefit most from them.

Should the scheme apply to purely electric vehicles or to hybrids as well?

I think that it should apply to purely electric vehicles, but that is a policy decision for Transport Scotland.

We look forward to hearing more about that in due course.

I have a question for everyone on the panel. What further initiatives should be considered to encourage the switch to electric vehicles? We are all used to going into petrol stations. Should they have charging points? What about changes to import duty or access to bus lanes? What do you think would help?

Incredibly enough, one of the big issues involves children. They are very aware of what is going on—we see them on television marching because they are upset about the state of the planet. The 203020 taxi fleet owned by the late Davy Young in Dundee went largely electric on the back of his grandchildren telling him off for driving dirty petrol cars. That level of pester power and understanding is underrated, and we could make a lot more of it.

Education at the school level will really drive the issue. Parents choose electric cars because their kids tell them that their cars are too dirty and that they are polluting the place and hurting them, and that is true. That is a strength that should be used.

I have never heard that described as “pester power” before. I shall use that term in the future.

My children already pester me.

We need a culture change, but we are seeing that happen. I have certainly noticed a big difference in the past year in respect of not just electric vehicles but the carbon agenda. Regulation always helps, and I think that net zero emission zones will make a big difference. People will not be able to enter city centres unless they have an appropriate vehicle.

A lot of people drive around not realising that there are electric vehicle charge points everywhere. Members have looked at the map and seen how prevalent they are.

One thing that we have been asking for is beginning to come through, however. I will give an example: the new station in Glasgow has a sign that indicates that there is a charge point out on the trunk road. If there are signs on the trunk roads that tell people that there is a charge point a given distance away and where to turn off to go to it, that is not advertising beyond the fact that the network is there. Awareness will come: people who drive but are afraid to have an electric vehicle will see signage that tells them that the network is there, which will give them range confidence—we do not like to talk about range anxiety; we like to talk about range confidence. The ability to see where the assets are is a surprisingly big driver for electric vehicles.

We still have a couple of minutes. Jamie Halcro Johnston and Gordon MacDonald want to ask brief questions.

We have tended to focus on domestic vehicles, but there is a huge number of commercial vehicles out there. A lot of them are company vehicles, including vehicles of larger companies such as the Royal Mail. How important could the impact be from changing those vehicles to electric vehicles?

Are you talking about the impact on the grid or on usage?

Both. Companies might have more ability to provide infrastructure such as depots themselves.

We would call that a return-to-base fleet, in which the vehicles charge overnight, so they potentially offer something—I do not want to call it a revenue stream, but smart charging can be controlled within a depot, and there is the potential to return power from vehicles to the grid to meet demand overnight. That is an exciting area.

I am not surprised that Scott Mathieson is desperate to join in the discussion. Those vehicles have the potential to save businesses money.

Is there a big enough focus on use by companies? We have talked a lot about domestic or private use today.

There are already companies out there with products to sell to those fleet businesses. The vehicles come through a little slower, but they are coming. I think that SSE put in a large fleet of electric buses in London. Quite a large demand for energy is created, as Scott Mathieson said, but that can be controlled and, if that demand is reduced, it can be delivered overnight but possibly at a lower cost. There is more to come, and the network’s businesses will have to work with third parties on that in a big way.

You may be desperate to say more, but it is open to any of you to write in to the committee to amplify what you have said today, or to add further comments that you want to make.

The final question is from Gordon MacDonald.

I am looking for clarification. A couple of people have said that the public charging points will have a local economic impact. I am looking at a proposal from a company called Gridserve, which talks about putting in the world’s fastest charging points, but then goes on to say that the bays will charge most electric and hybrid models within half an hour. Are you saying that there will be a local economic impact because folk will have to find something to do with the extra 25 minutes that it will take to charge their vehicle?

Potentially, yes. You are asking me to predict how people will behave. It is up to whoever installs the asset: units with different price points will attract people with different drivers. If someone is in transit, they will want to charge fast and go, because it is about business; if someone is travelling with family, that will inevitably involve a toilet break, and they will charge their vehicle at a slower rate for a lower cost and will stay longer. They may spend money in or explore the local area, or they may come back later having seen something that they like. It is very difficult for us as an association to quantify the impact—it would involve quite a major piece of research.

I accept that. I ask because you mentioned the local economic impact and I wanted clarification.

We are certainly seeing bed and breakfasts putting in charge points to encourage people with EVs to stay.

As a final addendum to that, you are talking about multiple 200 to 300kW chargers. I highlighted the impact of a bus depot with 80kW chargers and the significant, material impact of a large proliferation of such depots. We tend to find that the very high-capacity chargers have low utilisation rates. ChargePlace Scotland sees the lower-rated chargers having high utilisation, and the higher-rated chargers having lower utilisation, although they get more visits, interestingly.

We are out of time, but please feel free to write to the committee if there are further issues that you want to cover. Thank you for coming in today.

I suspend the meeting briefly to allow for a changeover of witnesses.

11:12 Meeting suspended.  

11:16 On resuming—