The Regulatory Assistance Project (RAP) identifies two key areas of power sector reform needed to jump-start electric vehicle (EV) adoption while maintaining reliability in a paper presented at the European Electric Vehicle Congress today. EU Power Sector Market Rules and Policies to Accelerate Electric Vehicle Take-Up While Ensuring Power System Reliability recommends adaptation of electricity market rules to allow participation of aggregated demand-side resources, fair competition, and proper valuation of flexibility, as well as changes to the regulation of distribution system operators (DSOs)—reforms aimed at minimizing the negative grid impacts and maximizing the grid benefits of EV recharging.

“How and when plug-in EVs are recharged can dramatically affect the electric grid,” cautions Sarah Keay-Bright, author of the paper. “We believe that EV charging controlled by a third-party aggregator offers the greatest promise to fully realise the multiple services EVs can provide to the electricity system, while also benefiting the EV owner.”

Ms. Keay-Bright sees potential for EVs to help integrate increasing amounts of variable renewable resources into electricity markets and in doing so improve the business case for EVs. Achieving this potential requires full implementation of the Third Energy Package, EU competition rules, Article 15 of the Energy Efficiency Directive, and EU Network Codes, and adaptation of market rules to properly value flexibility.

DSOs can play at least a neutral, and hopefully proactive, role in integrating EVs into local networks. To encourage this, Ms. Keay-Bright recommends decoupling DSOs’ revenues from energy sales and instead linking revenues to their performance in achieving public policy goals. She also recommends designing DSO grid tariffsto influence EV charging habits. Simple time-differentiated grid tariffs could make an important contribution in the early days of EV roll-out.

In the longer run, with the recommended reforms, Ms. Keay-Bright foresees a viable business proposition for a third-party aggregator, plus the opportunity to reduce EV ownership costs. An aggregator could dispatch a fleet of vehicles to recharge or discharge their batteries in response to grid tariffs and market signals—earning revenues for the grid services the EVs provides. The aggregator can then share a portion of those revenues with the EV customer through a simple and regular payment.

Ms. Keay-Bright notes the importance of close coordination between regulators. “Regulators setting fuel efficiency standards for cars will need to coordinate closely with those responsible for regulating the power grid. Such close coordination is crucial to enable system operators to aid the successful roll-out of EVs.”

Timing is critical. “Grid planning and investment are governed by very long time frames,” Ms. Keay-Bright adds. “New regulations must provide long-term regulatory and market certainty for investors, while at the same time establish sufficiently ambitious standards and competitive markets needed to spur innovation.”