Summary: Ofgem has issued a consultation on reforming network access and charging arrangements – with potentially significant impacts on the EV sector.

The projected increase in EV uptake could have a significant impact on network capacity at peak times, resulting in constraints and the need for costly reinforcement. In its consultation released on 23 July 2018, the energy regulator (Ofgem) sets out its proposals on how to incentivise EV users to shift charging away from peak times, as well as changes to network access and charging arrangements for larger energy users (such as EV fleet owners).

Domestic Charging

Currently, the use of system charge for domestic home charging (which will generally be charged by electricity suppliers as part of the customers’ supply bill) does not reflect the impact that the time or speed of charge has on the local distribution network, with most home charging being only limited by fuse size.  Ofgem wants to change this by introducing appropriate price signals for customers. Although the consultation does not go into detail on how these would be implemented, it seems likely that payment of higher use of system charges at peak times is likely – effectively mandating EV time of use tariffs.  The use of smart meters and smart chargers will, of course, be essential to achieve this.

Ofgem will need to consider the impact of these proposed changes on EV uptake carefully.  There seems little point in increasing charging costs to the detriment of EV uptake. Hopefully, any proposed changes are brought in only once EV use has become more firmly established or, at least, EV users are properly rewarded to the same extent as they are penalised (relative to existing arrangements) for charging at off-peak times.

Large Energy Users

For larger demand customers (such as EV fleet owners), Ofgem’s proposed review would cover changes to the types of connection which they may request from their local distribution network operator.  These changes have been proposed with a view to relieving the level of constraints on the distribution networks.

The proposed changes include the introduction of more bespoke connections. For example, a large demand customer’s connection could  provide for: (i) specific firmness of access rights (i.e. specifying when a connection may be curtailed), (ii) time-profiled access rights (e.g. providing just off-peak or seasonal access), (iii) short-term access rights (e.g. providing one year access only), (iv) defined long-term access rights (e.g. providing 5 years of fixed access) and/or (v) local or shallow access rights (e.g. providing access only to the local network).

These changes seem sensible, and should result in large energy users paying network charges based on the access rights they have chosen rather than just their usage, incentivising such users to only take network capacity which they actually need.  Large users may also benefit if they accept less than firm connections, paying lower network charges and being granted quicker access. 

Next Steps

The consultation closes on 18 September 2018 and Ofgem expects to decide whether to launch a significant code review to implement any changes by the end of the year, with some changes possibly being implemented by April 2022 and others in April 2023.