AEMC issue paper on the uptake of electric vehicles in Australia

The Australian Energy Market Commission (AEMC) has published a new issues paper examining the impact of the uptake in electric vehicles in Australia on the energy market.

The issues paper examines a variety of aspects of the uptake including the potential for new electric vehicle products and services, charging stations and their impact on the grid, and the benefits provided by electric vehicles in promoting more efficient use of existing infrastructure.

The AEMC has recognised that: “if we get ahead of the curve, we can make sure this technology makes a positive contribution to our future power system and doesn’t become another cost driver.”

The Numbers

Between 2018 and 2019 the sales of electric vehicles increased by more than 200%. In 2009, 6700 electric vehicles were sold in Australia. There are currently over 1930 public vehicle charging stations in Australia. The primary driver of the uptake of electric vehicles has been cost.

Australia currently has 22 battery and plug-in hybrid electric vehicle models available and it is expected that that number will increase by at least nine during 2020. The AEMC notes that while the global uptake of electric vehicles is expected to continue to increase substantially over the coming decade, the actual rate of increase is uncertain.

Electric vehicle charging stations

The number of public charging stations in Australia increased by 143% between June 2018 in July 2019. There are three categories of recognised electric charging stations:

  • Level one being charging via an existing standard power point;
  • Level two being a dedicated electric vehicle charger: typically found in homes, shopping centres, hotels and workplaces; and
  • Level three being fast charging units: typically found in commercial premises or en-route highway locations.

Interestingly, the AEMC considers the application of s 88 of the National Energy Retail Law in the context of the sale of energy from an electric vehicle charging station. Section 88 provides that any person who sells energy to a person for premises in the NEM is required to have a retail authorisation or hold an exemption.

The AEMC notes that the Australian Energy Regulator considers that the sale of energy to a person for premises captures electric vehicle charges at home or at a small business but does not apply to commercial electric vehicle charging stations.

The Role of the Retailer

In its paper, the AEMC examines the role of an energy retailer with respect to the electric vehicle market. The AEMC notes that electric vehicle charging habits will be primarily shaped by convenience.

The electrification of Australia’s passenger vehicle fleet is expected to materially increase electricity consumption in Australia and will change markets underlying residential demand profile. The AEMC notes that this presents an opportunity for retailers to develop innovative products for electric vehicle consumers who are likely to have greater consumption than non-electric vehicle consumers.

One limitation of the existing market framework is that a consumer is only able to have a single financially responsible market participant (FRMP) at each connection point. This limitation is familiar to those market participants who are registered as small generation aggregators (SGAs). Should the limitation be removed, it may be possible, for example, for a single customer to engage with separate service providers with different responsibilities i.e. for air-conditioning load, hot water, pool pumps and electric vehicle charging.

The question of multiple FRMPs was examined in the 2015 review of a proposed AEMO rule change conducted by the Commission where it was found that it would be uneconomical to enable multiple FRMPs at the one connection point. The commission has recognised that this question warrants further examination given evolutions in the market.

Submissions on the issues paper are invited until 19 March 2020 using the AEMC’s website under the project reference code RPR0012.

Who to Contact for More Information

Please get in touch if you have any questions on the above.