Posts Tagged → industry

Five opportunities for the Government to get EV policy right

‘Curtain-raiser’ analysis in The Energy

As the Government seeks to mould transportation policy in the light of the transition and a war in Iran, it must build and maintain trust that will serve individual, community and national interests

This evening we’ll see a second term government, with unprecedented parliamentary majorities, deliver a budget response to the “hard new world” facing Australia abroad and the hard life facing many Australians at home.

In this context, the Government faces many hard decisions. Even considering just the narrow scope of decarbonising transport, the Government has at least five consequential and controversial issues to contend with: subsidies for electric vehicles (EVs), subsidies for EV charging infrastructure, network pricing for behind-the-meter and rapid EV charging, road user charges for EVs, and fuel excise.

Each of these is part of the bigger question: how do all Australians receive an equitable share of the benefits and carry an equitable share of costs of the transition to a clean transport system?

In addressing this question, it is worth reflecting upon the experience of decarbonising Australia’s electricity system. In particular, the importance of building and maintaining people’s trust in the transition as a project that serves individual, community and national interests, with equitably distributed costs and benefits.

This trust has been undermined by the real and/or perceived inequities between regional communities that host coal power stations and transmission lines and inner-city consumers; as well as between the ‘solar haves’ and ‘solar have-nots’, whose difference in experience has only grown with the incentivised roll-out of batteries.

Electrifying transport

Turning to specific transport decarbonisation policies, the first issue – of incentivising EV uptake through Fringe Benefit Tax (FBT) exemptions – has already been announced ahead of the budget. This exemption will remain in place for until the end of March 2027, before being gradually phased out. This policy had been criticised as heavily biased to higher earners, and while the government noted that uptake has been highest outside of the inner cities, directing more than $1.4 billion to the top two tax brackets doesn’t pass the pub test for equity.

The Government has plenty of alternatives it could explore to counterbalance the FBT policy. Subsidising the electrification of taxis and buses would, for example, serve other parts of society and have high economic, environmental and fuel security benefits due to these vehicles’ high utilisation rates.

EV chargers

The second policy issue relates to expanding kerbside charging infrastructure for EVs. This infrastructure is critical for making EVs attractive, especially to those who don’t have access to off-street parking and those who rent or live in apartments. The Government has previously committed $40 million to support the growth of kerbside charging networks. This amount, humble compared to the billions spent on FBT exemptions, could be bolstered to expand the communities to whom kerbside charging would make EVs an option.

However, the issue of kerbside charging poses policy and regulatory challenges regarding who — between EV drivers, taxpayers and electricity consumers — should pay for this infrastructure. The Government’s subsidy program proposes taxpayers cover up to 30 per cent of costs, with electricity consumers covering the remainder through network charges. It furthermore proposes that commercial charging providers be allowed to cherrypick favourable sites, which risks pushing the costs to maintain the less favourable but still critically important sites  onto taxpayers and electricity consumers, without the cross-subsidisation of more profitable sites.

Network tariffs

The third policy issue pertains to how EV drivers should contribute to the upkeep of the electricity networks they use to charge. When charging at home or at work (or elsewhere ‘behind-the-meter’), EV drivers can avoid paying network fees by charging directly from rooftop solar. With EV charging adding a decent fraction of households’ energy consumption, this significantly increases the advantage of being a ‘solar have’, rather than a ‘solar have not’.

In response, the AEMC recently proposed to increase the fixed network charges paid by every customer. While it is commendable for the AEMC to advocate for equity (which its modelling suggests this reform would deliver), the volume of opposition highlights that distributional issues are not well suited to technocratic solutions, but require political leadership to justify the trade-offs across interest groups.

Another example of where this applies is the debate around how EV drivers should pay for the network when using fast-charging stations. Are demand tariffs the appropriate way of recovering the costs of these chargers’ bursts of high power consumption?

Road user charges

A fourth issue for policymakers is how to implement road-user charges. These charges are a way for EV drivers to contribute to state and federal budgets (notionally for road maintenance) in the absence of paying fuel excise. Once again, the delicacy is around the timing and magnitude of charges, so as to balance incentives for EV uptake with equitable cost distribution.

Fuel subsidies

Lastly, there is the issue of fuel excise itself. On the one hand, the Government is seeking to soften the blow to everyday Australians of the fuel price surges driven by the attacks on Iran; even if circumstances may ultimately require a reduction of fuel consumption. On the other hand, the Government is resisting pressure to place a cap on the Fuel Tax Credit scheme, which enables businesses to claim back the fuel tax they pay on diesel.

These credits were the 16th largest single expense in the 2025/26 budget, with an estimated cost of $10.8 billion. The proposal to cap diesel tax refunds at $50 million per company, per year – backed by Fortescue and IEEFA – would apply to around 18 of Australia’s biggest companies in mining – not farmers, fishers, small miners or truck drivers – and would boost the government budget by billions of dollars each year (and incentivise electrification).

For these five policy issues, and the question of Australians’ inclusive and equitable participation in the decarbonisation transition, this budget comes at a critical moment. The costs of inaction, of staying exposed to the volatility and precarity of fossil fuel supplies is indisputable and omnipresent, meanwhile the availability and attractiveness of clean alternatives is widely recognised and supported. But  there is a grave risk of losing the social license for the transition due to perceptions from voters that it isn’t benefiting all Australians, that its costs and benefits are being distributed inequitably, and/or that there is a lack of trust in the transparency with which trade-offs are being made.

None of the five policy issues have clear-cut answers. They each call upon the Government to make appropriate judgements – on each issue and the suite as a whole. But it is clear that the Government must communicate each decision with transparent reasoning and expected consequences. This is foundational to trust, and, as Chilli Heeler explained to her daughters Bluey and Bingo, “if there’s no trust, none of this [the world] is possible…  no roads, no power lines.”

Submissions to the AEMC on network regulation and EV charging infrastructure

I recently made two submissions to the AEMC on live rule change proposals, these are copied below.

My perspective on the first resultant draft rule change was included in The Driven.

“Imperfect as it is, the government’s program will make positive contributions by getting chargers installed in the near term, and collecting evidence to inform the next rounds of rule change processes and government policies.
I expect the learnings will reinforce how attention and resources need to focus more on urban planning processes and less on electricity sector processes,”

202606-AEMC_consultation-Facilitating_EV_ChargingDownload
202607-AEMC_consultation-ENRR1Download

PM’s Prizes for Science

It was an honour to attend the PM’s Prizes for Science, particularly with the inaugural PM Prize for Aboriginal and Torres Strait Islander Knowledge Systems.

A few lines from Anthony Albanese really stood out to me:

“the work that you do lasts through generations.”

“Over the span of thousands of generations, First Nations’ Australians have cultivated a unique connection to this land.
To its ecosystems, its skies and its waterways.
An intimate wisdom, passed on through deep time.
Through this connection Aboriginal and Torres Strait Islander people have created their own detailed knowledge of meteorology, astronomy, horticulture, biology.
For the longest time, much of this knowledge went unseen and unconsidered by mainstream science.
Yet, just as embracing the world’s oldest continuous culture has enriched our understanding of our history.
Understanding Aboriginal and Torres Strait Islander science allows us to see things we might otherwise have missed.
Shedding new light on problems, making fresh connections across disciplines and deepening our collective knowledge of our home continent, and the world around us.
This is surely what lies at the heart of science.”

Household energy data

Good CER policy depends on good (transparent, open source) analysis, which depends on good (open source) data. Here is data set of 100 Canberra properties, including their power demand, solar generation and battery operation. This has been foundational to much of the analysis I conducted at ANU, and I hope make others will find many other uses for it.

https://zenodo.org/records/14885589

The opportunities to flex water heating and electric vehicle charging loads in the ACT

“it is vital that before we build more network, we use more network” – AER Chair, Clare Savage

Electrification and population growth will both drive significant increases in electricity demand over the coming decades. This study investigates how the effect of this growth on zone substations could be mitigated by scheduling water heating and electric vehicle charging to occur during solar hours and overnight.

Taking the ACT as a case study, we find that the complete electrification of water heating and private vehicles, together with population growth would drive a large increase in total demand. By 2045 – when the ACT Government plans to get off gas – the increase is on the order of 75% for high growth regions such as Gungahlin. 30% is due to population growth and 45% from vehicle electrification. The electrification of water heating is compensated for by the efficiency of heat pump hot water systems, which we assume make up 75% of heaters in 2045.

We find that the super simple approach of scheduling water heating and vehicle charging loads to occur at fixed hours each day throughout a year effectively avoids these appliances contributing to peak demand on zone substations. Modeled zone substation demand continues to peak on winter evenings due to other loads (significantly space heating in the cold Canberra climate), which we model to be inflexible.

It concludes that simple strategic policies that shift loads into low demand periods would enable significant growth in total demand to be accommodated within existing zone substation capacity limits. For example, in the suburb of Gungahlin, such measures could limit peak demand increases to just 25%, while all private vehicles and domestic hot water are electrified, and the population grows by 30%.

For the avoidance of doubt, the study does not purport to predict how demand growth and demand scheduling will develop, but to provide quantified, plausible scenarios of how they could develop to motivate and guide policy and public initiatives.

Noting that zone substations are only one link in the electricity grid, three goals stand out:

  1. Realising the tremendous opportunities to schedule/flex electrified demand, even with simple and suboptimal approaches.
  2. Reducing winter evening demand, such as through better housing insulation & efficiency.
  3. Building frameworks to develop and drive uptake of services that more dynamicly optimise the power consumption of appliances. These must foreground free, prior, and informed consent and could harness the literature on responsible innovation.

Conference presentation and full report below

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Vehicle-to-grid response to a frequency contingency in a national grid

A paper published in npj Sustainable Mobility and Transport analysing the vehicle-to-grid response to a major grid disturbance in the Australian grid.

Abstract

Vehicle-to-grid technology enables electric vehicles to contribute their large, high-power batteries to power systems reserves. Here we report the first demonstration of a fleet of vehicles discharging to support system security after a frequency contingency in a national grid. Our results highlight the potential of vehicle-to-grid, with vehicles discharging within 6 s of the contingency event, and shortcomings, with vehicles recommencing charging before the power system had fully recovered.

Full paper below

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Presentation: Watt price equity?

IMHO, the energy system has 2 goals:
• Efficiency – minimizing total economic & ecological costs
• Equity – human wellbeing, individually and collectively

The (Nobel prize earning) Tinbergen rule stipulates that each of these goals requires its own policy instrument. Relying on 1 market price – to efficiently manage EV charging without inequitable punishing parents for cooking at 6pm – flies in the face of this.

So, what can be done? Late last year I had the privilege to speak my mind about this problem and potential solutions (spoiler: separating energy demand into an essential and a flexible component – which could just be EVs to start with) as part of a Victorian Council of Social Service event and in a presentation to the Australian Energy Market Commission (AEMC) economic research team.

The first preso was recorded

Slides and here

202411-Sturmberg-Energy_equityDownload

And context of the VCOSS project is https://vcoss.org.au/projects/2024/01/energy-health-nexus/

Flat fees for flexible EVs

This study builds upon the recently published Unplugged is inflexible report to explore one avenue by which EV drivers could be incentivised to: 

  1. plug their EVs in for extended durations, and  
  1. permit their vehicles to be charged flexibly.  

While there are many avenues by which this could be done, we here explore the potential for EV drivers to be offered very simple, flat retail offers based solely on how often they plug in their EVs and how much energy their EV consumes. This approach entirely removes considerations of when in the day vehicles are plugged in, which lightens the mental burden on drivers and may contribute to greater acceptance of managed charging. 

This concept is motivated by the belief that creating price-certainty, and ideally cost-certainty, is a core way in which electricity retailers create value for their customers. This EV charging arrangement engages customers (EV drivers) is a quid pro quo where retailers contribute their expertise and diversity of customers to manage pricing risk, and EV drivers contribute the flexibility of their charging demand. 

Our modelling shows that doubling the amount of time EVs are plugged in for reduces the cost of charging by half. To be clear, this requires nothing of EV drivers other than having their EV connected to a charger for longer periods, which enables more flexibly charging behaviour. 

To quantify the risk for retailers we conduct a statistical analysis in terms of the cost of EV charging per day or per kWh. This suggests that offering a fixed price per day may go beyond retailers’ risk appetite, making a fixed price per kWh the more attractive option. This is likely also fairer for customers as it charges for the precise amount of energy used. 

The addition of vehicle-to-grid increases the benefits of longer plug-in times by facilitating market arbitrage. Vehicles that are driven less than 40km per day and are plugged in to chargers for more than 8 hours a day (with vehicle-to-grid) can, on average, be charged at zero or negative cost. 

While outside of the scope of this study, we note that this same tariff concept (and simulation model) could be applied matching flexible EV charging with the generation of a collection of wind or solar farms. This would provide another way for a retailer to manage/fix their price exposure while simultaneously creating value for customers by charging vehicles with zero emissions power. 

Full report below

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Watt equity? Australians deserve a Basic Energy Right

This essay was first published in Australian Quarterly 95.3, Australia’s Longest running public affairs magazine, published by Australian Institute for Policy and Science https://aips.net.au/aq-magazine/current-edition/

AQ-95.3-JUL-SEP-2024-Watt-EquityDownload

Within the energy industry there is a popular, feel-good refrain that the energy transition will deliver a system that is ‘democratised’, in addition to being ‘decarbonised’, ‘digitised’, and ‘decentralised’. Here democratised is used as an umbrella term for a broad suite of desirable values: fair, just, equitable. Yet the way in which democratisation is envisioned to occur is, in contrast, blinkered – households are seen to gain political power as a consequence of their generating and controlling electrical power from rooftop solar, batteries, and electric vehicles – but what about those without?

This prevailing narrative of democratisation overlooks, amongst other things, the connection between privilege and ownership of these technologies, and the structural realities of social, as well as techno-economic, power. In particular, it ignores the systemic effects of managing energy through markets and, consequently, ignoring energy’s role as an essential service underpinning modern life.

The starting point of this essay is that the energy transition is not on track to improve equity. This is because equity will only be improved if it is prioritised above competing values, such as profit, in the millions of design choices that constitute the transition.

Such prioritisation is impossible within the existing (artificially) constrained policy landscape, in which the only options are those within the framework of indistinguishable individuals interacting through a market. This eliminates any space for unequal redistribution in recognition of the differing circumstances within the collective, and thereby contributions towards equity.

Progress towards equity rests on expanding the policy imagination. This essay offers one such suggestion: the establishment of a Basic Energy Right that provides all households with a modest amount of energy free of charge to meet their essential needs.

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