With the UK Government’s proposals to stop sales of new petrol and diesel cars by 2040, electric vehicles (EVs) are expected to become the main mode of transport on our roads. The Scottish Government has set targets to remove the need for new petrol or diesel cars or vans on Scotland’s roads by 2032.

New research by the Centre for Energy Policy at the University of Strathclyde, funded by the EPSRC National Centre for Energy Systems Integration (CESI) and involving collaboration with SP Energy Networks (SPEN), a division of Scottish Power, investigated who would ultimately pay for and gain from the intended upgrade.

The study focused on the network development and associated investment needed to support 20 per cent EV uptake by 2030.

Investment scenarios

It considered scenarios where the required investment could be undertaken across either the immediate three years before - from 2027 - or spread more smoothly across a 12 year period, from 2021-2032.

This is to allow the robustness and capacity of the network grids to be upgraded in a timely manner to allow both emissions reductions and to limit costs.

It found that despite a projected outlay of £2.7 billion that must be repaid via electricity bills, more than 3,000 jobs could be created by 2040 from even a 20 per cent switch away from petrol and diesel to electric powered cars. This is the projected uptake across the UK by 2030.

Principal Investigator, Professor Karen Turner, Director of the Centre for Energy Policy at the University of Strathclyde, said: “We found that the main value would come from people switching spending to the electricity industry in how they fuel their cars. 

“All those car drivers who were spending money on petrol and diesel would now be spending money on electricity.

“When consumers buy petrol and diesel, that money mainly goes overseas and to the Exchequer.

“But electricity has a stronger supply chain within the UK, so if we are powering vehicles by electricity, that value that can be unlocked and the money would instead go into the economy.”

Professor Turner said that the network investment work will also deliver benefits to parts of the economy during upgrade projects and added: “This is mainly through spending in the UK construction sector, which will ripple out to wage and other household incomes and help offset how the costs of the investment will impact across the economy.”

The research shows a gross gain of 3,071 jobs across a range of UK sectors by 2040, offset by predicted loss of 115 jobs across the manufacture and fuelling of petrol and diesel vehicles.

Employment gains

The greatest employment gains would be in the electricity sector itself and in public and private service sectors, including research, education and health.

Professor Turner added: “It could also create a whole range of different kinds of jobs because with the growth of electricity usage, the economy also grows.

“The research shows we need to look beyond the opportunities of manufacturing electric vehicles and batteries to focus on the potential for the EV roll-out to unlock, sustain and increase value in different parts of the economy as we move to a low carbon future.

“Our research also shows that investment in network upgrades needs to be undertaken in a timely manner to limit costs and disruption to the wider economy.”

The study also found that household income would trail overall UK gross domestic product due to households having to repay the network investment costs via higher energy bills.

The increased energy bills faced by commercial users will also ultimately put pressure on the costs of other goods and services whose production is impacted by electricity prices.

Low income

But the findings suggest that the negative financial impact on low income households would be minimal.

Professor Turner added: “It would mean an annual increase of less than £1 a year for the 20 per cent of UK households on the lowest incomes so it will have a limited impact in terms of concerns around driving more people into fuel poverty.

“In some cases, if investment activity was concentrated over three years, there would even be a short term net annual income gain for low income households of 82 pence.

“But, by the end of the investment period in 2030, average incomes would drop by 86 pence.”

If the network upgrade activity is spread across 12 years, the lowest income households suffer a maximum annual net loss of just 22 pence.

Improved efficiency in using EVS could also lead to reduced running costs, which could also release household income to spend on other things.

Professor Turner added: “The more we can design the transition to exploit opportunities for UK industry and workers, the bigger the prize can be, in terms of both tacking climate change and enabling our economy to grow and make people better off.”

CESI Director, Professor Phil Taylor of Newcastle University, said: “The findings show the role transportation decarbonisation targets can provide in delivering wider economic and industrial policy outcomes, but also how such outcomes are sensitive to the timing of investment activity to upgrade the capacity and robustness of the electricity network.

“The research also shows the significant value in taking an energy systems integration approach to the energy policy.”

Scott Mathieson, Network Planning & Regulation Director of SP Energy Networks, said: “The adoption of EVs, and the necessary spend on electricity networks are both key enablers of the UK’s transition to a low carbon economy and it is essential that we take a ‘whole system’ approach to assessing the costs and benefits of network investment to customers and society.

 “These results from the Centre for Energy Policy help us to look more broadly and should be factored into network investment decisions.” 

Find out more

Read the briefing paper on this research: "Who ultimately pays for and who gains from the electricity network upgrade for EVs?"

Professor Turner will give a presentation on the work at the Opening Plenary Session of the All Energy Exhibition and Conference at the Glasgow SECC on 15 May.