Solar PV and BPVs set to drive distributed energy supply market in 2018

Big Oil companies like Shell are competing for market dominance in the new BPV re-charging market.
Big Oil companies like Shell are competing for market dominance in the new BPV re-charging market against established utilities and infrastructure manufacturers.

Dr. CHRIS JARDINE, lecturer in renewable energy at Oxford University and co-founder of solar PV, battery storage and BPV charging provider, Joju Solar, looks ahead to the distributed energy sector in 2018.

Battery-powered vehicles (BPVs( and battery storage are both taking off exponentially and – with a host of new products and functionalities becoming available in 2018 – the energy transition is looking unstoppable.

Of all the predictions we are making for 2018, this one is a no brainer! By the end of 2017, there were 125,000 plug-in electric vehicles on UK roads, up from 90,000 at the end of 2016.  At these kind of exponential growth rates we can expect to see over 200,000 electric vehicles on UK roads by the end of 2018.

This exponential growth of BPV sales is partially driven by improvements in battery technology, but perhaps more importantly by increased social acceptance.

With and the lifecycle costs of BPVs already being cheaper than petrol or diesel, it is also being seen as the economically rational approach as well.  An increase in BPV ownership leads to a more widespread infrastructure, with charge points proliferating in the home, at work, and provided by councils in city centres. 

All this normalises electric-car ownership, and alleviates concerns about range anxiety.  Put all this together and we can expect to see a snowballing of EV sales over the coming years.

Meanwhile, electricity use in the UK continues to fall, as improved energy efficiency in homes and businesses reduces the demand for energy.

Critical here, is the switch to LED lighting, offering approximately 50% reduction in energy use in lighting – the largest subsector of electricity use in buildings.  Improvements in lighting efficiency also dramatically reduce the evening peak, meaning less power stations are required to ensure reliability of supply.

One of the most fascinating aspects of the transition to BPVs is that there is a multi-billion pound fight to be the key operators in this new marketplace – and all this is taking place in a way that it is virtually invisible to the end customer.

Put simply, if BPVs are to replace fossil fuelled transport, then the market for petrol and diesel will be replaced by one for electricity. 

 Whoever controls the BPV charging infrastructure will be replacing the petrol industry, and that is a huge prize up for grabs. 

Behind the scenes we’re seeing a four-way fight to end up owning the new BPV charge-point market – traditional suppliers of petrol such as Shell and BP; electricity utility companies; big data companies; and the chargepoint manufacturers themselves. 

Who’s going to win?  We don’t know, but it will be fascinating to see how this plays out.

Part of the recovery in the solar PV market has been driven by synergies between BPVs and solar PV. Many new PV customers are also new owners of an electric vehicle.  Whilst they may not have considered PV before, the idea of running their car off their own electricity is instantly and automatically appealing.

Much as we saw a dramatic fall in the costs of solar PV as it began to be mass produced, so we are also seeing the costs of battery storage technologies reduce, as they are similarly manufactured at scale (largely driven by the BPV market).  Over the past 6 years, the cost of Li-ion batteries has fallen by 20% each year, and we expect this ‘learning curve’ to continue.

All this should mean lower prices for installed battery storage systems across the board, but whether this is passed to consumers will depend on having a competitive market for home batteries.  At present Tesla offer the cheapest unit price (per kWh of battery capacity), and further cost reductions are likely to depend on whether Tesla’s competitors are able to challenge their price point.

Policy muddle

Energy policy for microgeneration, and renewables in general, remains somewhat contradictory. 

With the Department for Energy and Climate Change being subsumed into BEIS (the department for Business Energy and Industrial Strategy) it was unclear what sort of prominence would be given to the issue of climate change and the green energy sector. 

While some where concerned this would lead to a sidelining of the green agenda, optimists argued that this was a good opportunity to reframe the economy along green growth lines. This seems to be the case – the launch of BEIS’s Clean Growth Strategy affirmed the importance of energy efficiency and clean sources of generation, and the department has also launched a major energy storage initiative.

That said, whilst BEIS outlines a clear overall vision of what they would like to achieve, this carries the hallmarks of an inconsistent approach between Government departments, particularly the Treasury.  The last Autumn budget suggested no new policies for renewable energy until 2025 due to budget constraints, which runs contrary to the vision of Clean Growth forming the backbone of the UK’s post-Brexit economy.

This is also symptomatic of a wider split on energy policy within Conservative ranks. 

Broadly, the dramatic cost reductions seen in renewables means there is now a split between conservatives that favour the cheapest forms of generation (i.e. economically rational) and conservatives that favour traditional incumbent institutions and traditional means of generating electricity.  In simple terms it is a fight between economics and politics. 

With only a small Conservative majority, policy can be dictated by a few hardliners – which has resulted in a focus on gas (including fracked gas) and nuclear (including the horrendously expensive Hinckley C).  Onshore wind and solar PV look to be less well supported in policy terms, although that hasn’t stopped the first subsidy free solar farms being built.

We expect more subsidy free solar projects to follow in 2018, as economics wins the day.

Importantly, this policy shortfall could see the end of Feed-in tariffs for solar PV.  At present, FiTs are only announced until the end of March 2019.  If this is not extended, or no alternative put in place, we are likely to see another rush on solar PV towards the end of 2018 and into the first quarter of 2019, as people rush to get the last of the available funds. 

We welcome the start of subsidy free solar – with levelised costs of electricity as low as 4p/kWh generated by solar it is already cheaper than purchasing electricity from a utility.  However, if you are planning a project (particularly a commercial project with longer timescales) and would welcome the additional income from FiTs, it would be wise to start project development in earnest now.

However, Brit-Govt. funding for thousands of BPV charge points is not being used by councils – so BEIS Energy Minister Jesse Norman and Claire Perry have written to local authorities urging them to take up electric car charge-point funding after it emerged just five councils in the whole of the UK have taken advantage of an electric car scheme.

In 2016 the Department for Transport launched the On-Street Residential Chargepoint Scheme, offering funding for local authorities to buy and install BPV charge points. But the take-up more than a year later has been extremely disappointing.

Jesse Norman, MP, said: “There are nillions of homes in the UK do not have off-street parking, so this funding is important to help local councils ensure that all their residents can take advantage of this revolution.

“BPV charge points can be anything from new points popping up on streets to adapting existing lampposts to make the best use of space. The money has been available since 2016 but so far only  five councils have come forward, so there is £4.5 million still available for them – enough for thousands of extra points.”

15 Jan 2018

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