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Is the UK ready for the transition to electric cars?

The country's ambitious plan will require huge efforts across the board

National Grid - Is the UK ready for the transition to electric cars?

The UK is planning to phase out fossil fuels on the roads by ending the sales of new petrol and diesel vehicles in 2030.

Hybrids will be allowed, but the sale of new ones may be banned beginning in 2035.

READ: Hydrogen specialists surge on Boris Johnson's 10-point green recovery plans

The government looks to invest more than £2.8bn in electric vehicles charging points and developing long-lasting batteries in UK gigafactories to support the move.

Of this, £1.3bn is pledged to accelerate the rollout of charging points for electric vehicles in homes, streets and on motorways in England, £582mln in grants for ultra-low emission vehicles, and less than £500mln over the next four years in developing mass-scale production of electric vehicle batteries.

“Less than 10% of cars sold in the UK during 2020 so far have been battery electric vehicles (EVs),” analysts at Wood Mackenzie said in a release.

“Getting to 100% will require a huge effort across the entire supply chain, as well as ensuring that enough fast charging infrastructure is available to keep all new EVs.”

But Graeme Cooper, Transport Decarbonisation Director at National Grid PLC (LON:NG.), told Proactive that the transmission network is ready for the change.

“If everyone in the UK switched to EVs overnight and used smart charging, we think peak demand would only increase by around 10%, which is still below historic peak demand,” he said. 

According to the utility company’s latest estimate, British roads will see 11mln EVs by 2030 and over 30mln ten years later.

Up to 80% of households with an EV will be smart charging their car by 2050, while up to 45% of homes will actively help to balance the grid through vehicle-to-grid (V2G) technology.

V2G allows the batteries of the vehicles to store energy and discharge it back to the network when needed, for example at peak times.

The FTSE 100 firm aims to operate the electricity system with zero carbon by 2025, meaning fossil fuels will have a presence for decades to come, though it will not make up for the majority of the energy mix and will progressively flatten by 2050.

According to Wood Mackenzie, the twin areas of focus appear to be offshore wind and nuclear power.

Downing Street has committed to raise its target of offshore wind deployments to 40 GW by 2030 and is not giving up on nuclear despite European neighbours are looking for alternatives.

There is one large-scale new plant under construction, EDF's Hinkley Point C, and the government is expected to soon give the green light to a second, Sizewell C.

“I think the UK is heading towards quite heavily decarbonised grid,” Adam Collins, analyst at Liberum, told Proactive.

“The question mark is at this stage about whether the grid will be able to accommodate a significant increase in EV ownership on a five or ten year view.”

According to Collins, the country needs significant investment in substation capacity and parts of the grid and the more EVs there are, the more expensive it gets.

To make the transition effective, there has got to be a unified approach to both incentivise consumers to adopt EVs alongside the development of reliable infrastructure, supported by a coordinated policy.

Chargers can be rolled out both outside and inside the home, though the latter will have to continue to use relatively low voltage systems.

Some cars may be charged by off-grid electricity generators, such as fuel cell, which are powered by ammonia or natural gas but Collins expects the majority of cars to rely on the grid.

London-listed investors have been focusing on the space, with Ninety One (LON:N91) launching the Global Environment fund to invest in companies that are contributing to the decarbonisation of the world economy.

Similarly, Scottish Mortgage Investment Trust (LON:SMT) has invested in soon-to-be S&P 500 giant Tesla since 2013, and today it is its biggest holding.

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