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4. Integrate battery electric vehicles into the electricity grid

Infographic showing the objectives and actions of this priority initiative. Text description follows

Objectives:

  • Ensure the electricity system is EV-ready.
  • Support EV charging technologies for greater grid security and bring benefits to consumers and electricity market participants.

Actions:

  • Research on electric vehicles charging on the grid
  • Collaborate with energy experts, energy market bodies and the electric vehicle industry on reforms
  • Build electric vehicle modelling capacity
  • Support smart and emerging charging technologies
  • Research charging and user behaviour to optimise the operation of the electricity grid
  • Australian Government leading reforms through energy ministers

Opportunity

Feedback on the discussion paper stressed that the rollout of electric vehicle charging and related incentives should promote energy reliability and minimise impacts on other electricity consumers.

The government understands that it is important to take steps to ensure Australia’s electricity grid is EV-ready. This will ensure all consumers who use the electricity grid can benefit without additional costs being imposed on the public or the reliability of the grid being compromised.

McKinsey (2018) estimates that around 75% of electric vehicle charging will occur at home, with the other 25% occurring at work or public chargers. We can meet the increased demand for charging at home by using lessons learned from the integration of Australia’s rapid uptake of household rooftop solar (AEMC 2021). This will also allow us to take advantage of bidirectional electric vehicle chargers, enabling electric vehicle-to-grid capability in periods of low and high network demand.

This large proportion of at-home charging means the government must consider how this behaviour may impact the grid, including the impact on those who do not own an electric vehicle. For example, at a local level, if multiple electric vehicles are charging at the same time in close proximity (in the same apartment complex or street), increased demand on the local grid may increase the risk of overloading the network.

However, well-managed battery electric vehicle charging offers a new form of flexible demand to support the electricity grid. Taking early action to manage the additional stress that electric vehicle charging could place on the grid will avoid electricity network upgrade costs (AEMO 2020). We estimate investing in smart charging infrastructure and working with energy market bodies will ensure a reliable and affordable electricity supply for all Australians, helping to avoid network costs of around $224 million being imposed on consumers.

Smart charging technology manages electric vehicle charging in response to what is happening in the electricity grid. This includes taking advantage of periods of reduced demand or excess generation. Charging electric vehicles when there is a lot of renewable energy generation or outside peak demand times will minimise impacts on the grid. This is also when electricity prices are likely to be lower, benefiting consumers.

Smart charging technology and pricing incentives can help address the emerging challenges of electric vehicle integration. The technology allows consumers, aggregators and grid operators to effectively and accurately manage potential impacts on the electricity grid.

'Shifting this load to other parts of the day therefore enables customers to gain more favourable pricing and enables networks to better manage demand. We therefore see this as a critical piece of information that motorists need to understand. If we can shape their behaviour from the day they receive their EV, we can establish positive usage patterns that will benefit both motorists and networks in the long term'

– CitiPower, Powercor and United Energy

Actions

On 1 October 2021, National Cabinet endorsed the final package of reforms for the Post-2025 National Electricity Market design. This ongoing work also identifies a pipeline of future market reforms to address these issues. This includes measures to encourage flexible demand to enable consumers to respond to market signals. These reforms will incentivise charging and discharging of electric vehicles when the system is at risk due to very low or very high demand.

In addition to this work, the Australian Government will proactively work with state and territory energy ministers to accelerate priority reforms to ensure the grid is EV-ready.

The government will ensure that any reforms progressed to make the grid EV-ready will:

  • prioritise the reliability of the grid and affordability of electricity prices for all Australians
  • reduce regulatory barriers to the rollout of new technologies to stimulate private sector investment
  • encourage new technology uptake in both metropolitan and regional areas to promote fair access and consumer choice.

The government will take a list of priority reforms to state and territory energy ministers to progress. This list will grow as new issues emerge, but will initially include the following priorities:

  • exploring network tariff reform to identify additional opportunities to encourage charging behaviour and infrastructure rollout
  • incentivising the use of smart chargers in households, including assessing regulatory options
  • tasking the energy market bodies to partner with governments on grid integration matters.

Energy market bodies will be tasked by energy ministers to help with grid integration and strengthening market assessments. These bodies include the Australian Energy Market Operator (AEMO), Australian Energy Market Commission (AEMC) and Australian Energy Regulator (AER).

These priority reforms will complement the work on the Energy Security Board’s Distributed Energy Resources (DER) implementation plan to safely and efficiently integrate DER, including electric vehicles. This work considers reforms such as smart charging standards, interoperability standards, and flexible trader models as part of an increasingly 2-sided market. These reforms will support optimal grid operation and stability to minimise costs and benefit all electricity consumers.

These reforms will be informed by work such as the Australian Government’s existing grid integration analysis study (Action 4.1) and complement other government work to ensure the grid is secure, reliable and affordable for Australians.

The government will collaborate with energy market experts and the electric vehicle industry to plan for large numbers of battery electric vehicles (Actions 4.2 and 4.3).

Exploring reforms and the incentives for household smart charging is also supported through the roll-out of key infrastructure funding through the expanded Future Fuels Fund. This will see the government co-investing with industry to roll out an estimated 50,000 new smart chargers in Australian households and continue to trial emerging charging technologies (Action 4.4) and undertake studies to better understand charging user behaviours (Action 4.5).

The results from these projects, along with research and modelling, will be used to advance Australian Government-led priority energy market reforms through state and territory energy ministers (Action 4.6).

Action

Lead agency

Delivery

4.1

Research on electric vehicles charging on the grid

The government is undertaking a grid integration analysis. The study is exploring:

  • ways to encourage motorists to charge at periods of low demand to keep electricity prices low
  • how this will be integrated into future retail electricity market offerings.

DISER

2021 to 2022

4.2

Collaborate with energy experts, energy market bodies and the electric vehicle industry on reforms

Through state and territory energy ministers, the government will collaborate with energy market bodies and the electric vehicle industry on reforms.

Work with industry through ARENA’s Distributed Energy Integration Program (DEIP) Electric Vehicle Working Group with a focus on finding the best opportunities to integrate battery electric vehicles with electricity grids.

DISER and ARENA

 

Ongoing

4.3

Build electric vehicle modelling capacity

Build government modelling capability to:

  • forecast impacts of increased electric vehicle ownership on electricity grids
  • help identify requirements for a roadmap to roll out electric vehicle infrastructure.

DISER

2022 to 2025

4.4

Support smart and emerging charging technologies

The $250 million Future Fuels Fund will support the installation of smart charging technology in households to manage the impact of charging on the grid.

 

ARENA is currently supporting trials of emerging technology such as bidirectional chargers. These trials will explore the potential for battery electric vehicles to serve as distributed energy resources that:

  • provide benefits for business and households
  • contribute to grid security and reliability.

ARENA

2022 to 2025

 

See the ARENA Knowledge Bank latest results and insights

4.5

Research charging and user behaviour to optimise the operation of the electricity grid

Examine how electric vehicle charging and user behaviour can be incentivised to optimise operation of the electricity grid. This includes making the most of low cost and low emissions generation.

DISER

2022 to 2025

4.6

Australian Government leading reforms through energy ministers

Consider results from actions 4.1 to 4.5 above, and the Energy Security Board’s post-2025 electricity market design, to lead reforms through the Energy National Cabinet Reform Committee. In addition, reforms to support the integration of hydrogen technologies into the energy and transport sectors will be considered.

DISER

Ongoing