ESBN Electric Vehicle Pilot & Associated Assets

Transcription

1 The Commission for Energy Regulation s consultation ESBN Electric Vehicle Pilot & Associated Assets ESB ecars submission 29/11/2016

2 Table of Contents 1. Preface... 3 Introduction The assets created during the EV pilot are now critical to the achievement of Ireland s longterm public policy objectives In technical and engineering terms, the EV pilot has been highly successful and is acknowledged as such globally The Preparation for EVs on the Distribution System report completed during the Pilot is an important and valuable body of research for the Irish Electricity System The Publicly Accessible EV Charging System created as a result of the Pilot has the potential to create economic value for all electricity customers Consistent with its role, ESB has a long-term commitment to support the electrification of transport and provide high quality service and competitive pricing to its EV customers ESB is fully prepared to facilitate and support competition within the Publicly Accessible EV charging sector as it develops Response to the questions outlined in the CER paper Funding of the EV trial:... 7 a) The CER requests respondents views on the ESB ecars proposal regarding funding in relation to the additional expenditure on the trial a) b) CER objectives in relation to EV policy:... 9 Do you agree with the CER s objectives for EV policy?... 9 Are there other objectives the CER should consider? c) Do you consider conditions should be attached to the ownership of the assets? If so, what kind of conditions should be added? a) b) c) ESB ecars Proposal: Do you agree with the ESB ecars proposed four options? Are there other ownership models that the CER should consider? What is your recommended option? d) Under your recommended option how would CER ensure that the current value of the assets is adequately reflected? /11/2016 ESBN Electric Vehicle Pilot & Associated Assets 2

3 1. PREFACE Introduction ESB ecars welcomes the opportunity to respond to the Commission for Energy Regulation s (CER) Public Consultation regarding the future of the Electric Vehicle (EV) Infrastructure Pilot. The outcome of this important consultation will impact not just the future ownership of the assets installed as part of the EV pilot, but will also be pivotal in shaping how Ireland s entire road transportation sector and climate change policy develop over the long term. As set out in the CER s consultation paper, approval was granted by the CER in March 2014 for the ESB Networks business (ESBN) to carry out an extensive pilot project in respect of electric vehicles. CER allowed ESBN to recover the cost of the project in accordance with ESBN s request for funding of 25m. As part of that decision, CER required ESBN to produce a report assessing the impact of the pilot. The report was finalised in 2015 and is now available on the CER website. This pilot study was conducted by ESB ecars on behalf of ESBN. Any assets developed during the pilot were to be subject to a public consultation to determine their future at the end of the pilot. The CER initiated its public consultation on 14 October 2016 outlining four possible options for the future of the charge point infrastructure: 1. Assets become part of the Regulatory Asset Base (RAB) 2. Sale of assets via public tender in a single lot to a third party 3. Sales of assets via public tender in multiple lots to third parties 4. ESB ecars ownership The main body of this paper responds in detail to the questions outlined by the CER. However, in this introductory section, we would like to address seven important points that we believe should be considered by the Commission in its decision process. 1. The assets created during the EV pilot are now critical to the achievement of Ireland s long-term public policy objectives In the period since 2008, policy drivers at national and European level for the electrification of transport have strongly increased. Policy makers are seeking solutions to address complex problems such as climate change, premature deaths from poor air quality and over reliance on imported fossil fuels. Policy initiatives include the Energy Union Package, Alternative Fuels Infrastructure for Transport Directive and National Low Carbon Mitigation Plan. With these policy drivers in mind, the recent National Policy Framework, which forms part of the Alternative Fuels Infrastructure for Transport Directive, has forecast a necessary trajectory of 20,000 EVs by 2020 rising to over 800,000 in Moreover, global experience of the roll-out of electric vehicles demonstrates that the existence of a robust, extensive and reliable publicly available EV charging infrastructure is an absolute necessity for encouraging drivers to switch from petrol and diesel to EVs. For example, customer research conducted during the European Union funded Trans-European transport network (TEN-T) fast charger deployment project in Ireland and the UK showed that over 70% of EV drivers would not have purchased their vehicles without the existence of a robust network of fast chargers. 29/11/2016 ESBN Electric Vehicle Pilot & Associated Assets 3

4 2. In technical and engineering terms, the EV pilot has been highly successful and is acknowledged as such globally The pilot involved planning a roadmap for the roll out and trial of electric vehicle infrastructure in Ireland. A world first, the pilot involved comprehensive research on charge points specification, type of locations and grid impact of mass uptake. The electric vehicle pilot project in Ireland has been extensive, creating a nationwide infrastructure that provides charging facilities for all electric vehicle types. The pilot ensured that the results of the pilot were comprehensive and presented a realistic indicator of the impact of EVs on the electricity network. Based on the research conducted as part of this EV pilot, the needs of electric vehicle drivers became more apparent and wellunderstood, as did the impact of electric vehicles on the electricity system. Today, and after just six years, Ireland has one of the first and most advanced charging infrastructures anywhere in the world and which is ready for the mass uptake of electric vehicles. The majority of Irish towns with a population of 1,500 or more have been provided with at least two charge points, providing extensive coverage and certainty to EV drivers. Ireland s motorway system is now fully covered by fast chargers at approximately 60km intervals. In addition, the system is fully inter-operable with the Northern Ireland system, allowing seamless cross-island travel for drivers from both jurisdictions. Furthermore, a range of vital supporting services have been created to ensure a high quality customer experience for EV drivers, support the uptake of electric vehicles and allow car manufacturers to introduce EV models for sale in Ireland. These elements include: A dedicated service and emergency response team Preventative and reactive charge point maintenance systems, processes and responders 24 hour Customer Contact centre Next generation ICT Charge Point Management System (CPMS), Digital customer applications online chargepoint map, real time customer information, smart phone app, website. These successes have led to international recognition of ESB in this field. For example, ESB ecars staff are among the main authors of the Open Charge Point Protocols (OCPP) that are now the de-facto standard for ensuring open communication between charge points, ICT systems, electric vehicles and billing systems. In addition, ESB was the first network operator in the world to deploy dual standard CHAdeMO/CCS rapid chargers capable of charging Japanese, German and French EVs. 3. The Preparation for EVs on the Distribution System report completed during the Pilot is an important and valuable body of research for the Irish Electricity System Consistent with the terms of reference of the pilot, ESB Networks through ESB ecars, has produced a high quality and peer-reviewed body of original technical research and development work (Preparation for EVs on the Distribution System) that will allow the CER, DSO and other stakeholders to anticipate and plan for the needs of the Irish distribution network for decades as the mass uptake of electric vehicles is set to become a reality. The TSO, (Eirgrid) also oversaw the production of the pilot study report. Comprising over 600 pages and covering both technical and economic aspects, this report details findings and recommendations across 42 areas grouped in seven work packages. This is a highly significant piece of research that will inform the future long-term needs of the Irish electricity transmission and distribution networks and covers such areas as: Appropriate connector technology standards and their physical system impact, Optimisation of metering and safety standards, Smart charging and network operation implications, Electricity Network planning, Impact of EV uptake on DUOS charges, Facilitation of competitive market structures Assessment of implications of European Union transnational projects. 29/11/2016 ESBN Electric Vehicle Pilot & Associated Assets 4

5 These R&D findings are at the cutting edge in international terms and components of these findings are already being referenced world-wide by research organisations such as the Electric Power Research Institute in the United States. 4. The Publicly Accessible EV Charging System created as a result of the Pilot has the potential to create economic value for all electricity customers The 31M ( 25 million original funding and 6.1million additional funding) invested in the pilot project through the end of 2015 has covered the cost of creating and operating a robust and extensive EV charging infrastructure of almost 1,000 charge points with nationwide coverage as well as advanced back office ICT systems and customer service capabilities. All of this has been achieved for less than the cost of 3 to 4km of dual carriageway. It is widely recognised that EVs are critical to achieving Ireland s climate and air quality objectives. Similarly, international research also confirms that the existence of an extensive and reliable publicly accessible charging network is a required prerequisite to encourage drivers to switch to EVs. In this vein, one of the most important findings of the EV pilot was a techno-economic analysis which demonstrates that all Irish electricity network customers (and not just EV drivers) could benefit from mass adoption of electric vehicles. This financial benefit stems from the greater usage and higher load factors on the existing network as cars are powered by electricity, as can be seen in Figure 1 and as we have seen this uptake would be supported by the existence of an extensive and reliable publicly accessible charging infrastructure. Figure 1: Mass Adoption of EVs Reduces Network Costs for all Electricity Customers (Scenario: 3,530kWh per EV p.a., Pro-Rated Capex & a 2% EV penetration rate in 2020 reaching 15% in 2030) DUoS: The charges suppliers pay to distribute electricity to homes and businesses are called the Distribution Use of System (DUoS) tariffs. Source: Preparation for EVs on the Distribution System Pilot Project Report. Work package 5.1, Parameterised Models to Support DUOS Impact Analysis. 29/11/2016 ESBN Electric Vehicle Pilot & Associated Assets 5

6 5. Consistent with its role, ESB has a long-term commitment to support the electrification of transport and provide high quality service and competitive pricing to its EV customers ESB is fully committed to decarbonising its own electricity generation capacity and views this resultant clean energy as critical to decarbonising the heating and transport sectors. The electrification of transport is a cornerstone of ESB s strategy and so we are committed to supporting Ireland s transition from conventional fuels in transport. Originally, it had been the intention of ESB to commence operation of the EV assets on a commercial basis upon conclusion of the EV pilot. This strategy had been predicated on EV numbers increasing in the region of 20,000/25,000, which is the required critical mass to facilitate commercialisation in Ireland. However, the expected level of growth in electric vehicles has not materialised during the last number of years due to a number of reasons, including the failure to introduce key policy measures to encourage the growth of EV sales as has happened in other jurisdictions. Consequently, it is not practical for ESB to continue to carry the significant costs associated with operating this nationwide EV infrastructure since January 2016 and providing service to drivers without clarity on policy and funding. Large scale growth in the EV sector is a key strategic objective of the electricity industry in parallel with the decarbonisation of electricity generation. Therefore, in setting any fees for use of the publicly accessible infrastructure, we would consult with EV drivers, car manufacturers and other relevant stakeholders, as it is in ESB s interests to design an attractive range of packages that would meet the needs of, and provide cost-effective driving to, all segments of EV drivers with a view to contributing to, rather than limiting, sales of EVs. 6. ESB is fully prepared to facilitate and support competition within the Publicly Accessible EV charging sector as it develops As we outlined within our detailed response, we do not believe that as the EV market develops and grows, there would be enduring barriers to entry within the market for publicly accessible EV charging. At the highest level, EV charging must be priced attractively compared to petrol or diesel as a fuel source from a Life Time Cost of Ownership perspective. In addition, for the vast majority of drivers and journeys, publicly accessible EV charging will not be necessary and would compete with drivers own domestic home chargers which can provide low cost residential electricity. Moreover, there are currently no regulatory and few technical barriers to third parties wishing to install their own charge points and offer EV charging on a commercial basis. Indeed, the only significant barrier to entry by third parties into the Irish EV public charging sector, pending increased take-up, is the current small scale of the EV customer base in Ireland (just ~2,300 EVs). An examination of the experience of those regions where the mass uptake of electric vehicles is occurring (Netherlands, Norway, UK), demonstrates that publicly accessible EV charging within these markets migrates towards a competitive structure once sufficient numbers of EVs are on the road even where early entrants had enjoyed regulatory or government support. In an Irish context, the recent move by Tesla to build their own network of Superchargers for their drivers is highly suggestive of a future trajectory towards competition and entry by other parties. 29/11/2016 ESBN Electric Vehicle Pilot & Associated Assets 6

7 2. RESPONSE TO THE QUESTIONS OUTLINED IN THE CER PAPER 1. a) Funding of the EV trial: The CER requests respondents views on the ESB ecars proposal regarding funding in relation to the additional expenditure on the trial. In its Decision in 2014 (CER/14/057), CER agreed that an extensive pilot was required to ensure that the increased load that would be created by EVs is accommodated in the most efficient way possible, without compromising safety, security and reliability of supply, and with the least possible impact on the electricity customer. The additional 6.1m of costs incurred were necessary for the successful completion of this R&D pilot and could not have been foreseen by the Commission or ESB Networks at the commencement of the pilot. They also represent excellent value for the Irish electricity customer, as well as supporting the achievement of important public policy objectives. ESB ecars believes that the additional 6.1M to cover the extra cost was necessary to ensure that the pilot truly reflected an appropriate charging infrastructure model for Ireland and so added critical value to the pilot and so ultimately, benefitted electricity customers. The market for electric vehicles is still at a very early stage and the necessary ecosystem to support the growth of the market is evolving. This is true for almost all areas including policy supports, charging infrastructure, supporting IT systems, business models and battery technology. When the EV trial was initiated in Ireland it was one of the first national charge point networks anywhere in the world. There were few if any charge point manufacturers in operation and little consensus on technical standards and specifications. From the start, the ecars team set appropriate detailed technical charging specifications which envisioned a network of smart and interoperable charge points in order to deliver a trial with utility-grade levels of service and safety. This meant that many equipment manufacturers had to develop new technology in order to meet the technical requirements set out by the ESB ecars team. For risk management purposes, a decision was made to procure a number of charge point suppliers, to avoid overreliance on a single manufacturer. The range of solutions deployed could then be streamlined as the trial progressed. While this was successful in the longer term, this supplier diversification strategy did mean that some of the charging equipment failed to provide the required level of reliability and service required by the pilot and by EV drivers. In some cases, this meant that charge points ultimately had to be replaced with equipment which provided more reliability and certainty to drivers. Furthermore, as the trial developed, it became apparent that fast charge points would form a much more important element of the charging mix than when the trial was first envisaged. These chargers provide EVs with an 80% charge in as little as 25 minutes and so became essential for longer journeys in an EV. A decision was made to expand the number of fast charge points to include locations at approximately every 60km on major interurban routes. This was deemed to be an appropriate distance to allow for electric vehicles to circulate without impediment and so ensure that the most accurate data could be collected. Without this fast charger coverage, EVs would have been unlikely to travel longer distances and this would have skewed any data collected. In order to minimise the costs to electricity customers, ESB also sought and secured European Union TEN-T funding to support this measure. As a result, the number of fast chargers available to drivers is now almost 80, as opposed to the original plan for ~30. This is important as, for example, a survey of EV drivers in Ireland and the UK conducted as part of the European Union funded Rapid Charge Network (RCN) project found that over 70% of the 29/11/2016 ESBN Electric Vehicle Pilot & Associated Assets 7

8 RCN respondents indicated that they would not have bought the EV without rapid chargers available and over 76% of the respondents emphasise that the availability of a rapid charging infrastructure influence the decision of purchasing an EV as the next car. Given that techno-economic analysis conducted during the pilot has demonstrated that large-scale adoption of electric vehicles would reduce network costs, this investment will prove beneficial to the interests of all electricity customer. (For the avoidance of doubt, this EU funding is separate to the additional expenditure referred to in this paper.) A further unforeseen complication that materialised, again reflecting the nascent nature of the EV industry, was the introduction of the new Combined Charging System (CCS) standards for fast DC charging from German car manufacturers in 2012/13. This meant that any new charge points being installed needed to cater for both existing EV users using the earlier original Japanese CHAdeMO standard, as well as the new CCS standard. To facilitate this, fast charge points were procured that have multiple connectors allowing for all EV types to be catered for. It was also necessary to ensure a geographic spread of the new standard so that the associated cars could travel uninhibited. This ensured that data collected was as representative as possible by maximising the number of electric vehicles makes and models in circulation that could use the pilot s fast charging infrastructure, At the beginning of the trial an ICT system was also procured to monitor and manage the operation, access and maintenance of the charge point network as well as to collect the data that was required for the pilot. The parallel development of a 24 hour customer service call centre to assist with customer issues and dispatch an emergency response team created the need for superior functionality and network oversight from the IT system. To meet these requirements, a next generation charge point management system was procured and stood up during The EV industry is new and is evolving rapidly, with much of the technological and policy landscape continuously changing. This evolution makes it hard to predict technological and customer requirements in the short term. To date, ESB has been willing to evolve and adapt the network to ensure that it is fit for purpose, and that the pilot is representative of the charging network that is required to service EV customers in Ireland. This is evident in the innovations that have been made by ESB beyond what was initially projected would be necessary as part of the trial and the achievement of the R&D deliverables that were specified by the CER. As the EV industry moves forward, continued investment will be necessary to ensure that this charge point network meets the needs of a growing number of EV drivers and so facilitates Ireland s policy objectives. In summary, this spend has been requested to cover the following items: Upgrading the Charge Point Management System to meet the requirements of the 2014 EU Alternative Fuels Infrastructure for Transport Directive and provide reliable real time information on the status of the EV chargers. Expanding and retrofitting the fast charger fleet to accommodate the new CCS standard which was introduced during 2012 by the German car industry. Provision of a 24/7 customer service and developing the technical capability to remotely reset chargers to ensure that EV drivers are not stranded. Continuing to ensure that a nationwide charging service was provided to EV drivers in a safe and reliable manner in a period before EV charging was commercially viable. Maintaining the national reach of the current network and ensuring that all major arterial routes between Ireland s cities are adequately covered by fast chargers. This spend incurred of 6.1 million over and above the original regulatory allocation represents good value when put in the context of what has been achieved and in light of the importance that electrification will play in Ireland s ambitions to decarbonise the transport sector. As noted elsewhere, the R&D pilot has been highly successful in delivering the set of 42 critical inputs and insights that the CER and other stakeholders will require in order to plan, design and optimise the Irish electricity system for decades to come. Without this additional expenditure, the EV charging system would not have been able to support this important work. Furthermore, as explained in the Pilot Project Report it is projected that the large scale adoption of EVs in Ireland would benefit all DUoS customers over 29/11/2016 ESBN Electric Vehicle Pilot & Associated Assets 8

9 time by reducing the average unit price of electricity. This would come through increasing load factors on the national transmission and distribution system. Indeed, the benefits to all electricity users are maximised in scenarios where both EV uptake occurs more quickly and when EV drivers make greater use of their vehicles (e.g. by driving longer distances). This additional spend, outside of the originally envisaged costs, ensured that the charge point network remained operational and further advancements were implemented during this time. The expenditure on CCS compatible charge points gave a greater geographic spread of the standard and ensured that major international car manufacturers would be able to introduce new EV models to Ireland. Finally, the credibility of the overall electromobility sector in Ireland would have been damaged if this investment has not been made. Specifically, if the charge point network had collapsed or experienced high levels of outage, this would have undermined, for many years, Ireland s ability to achieve the mass roll-out of electric vehicles a roll-out that is both necessary in order for the country to achieve its climate and air quality goals and is in the long-term interests of all Irish electricity customers. Moreover, during the period since the EV pilot was completed and the results provided to CER at the end of 2015, ESB has acted to ensure that service has continued to be provided to Irish EV drivers. We have made this investment with no assurance over our future ownership of the assets and without beginning cost recovery from users. Without this expenditure, the system would have collapsed with resultant damage to Irish public policy, EV drivers and negatively impacting the long-term interests of the TUoS/DUoS customer (directly through obsolesce of the pilot assets and indirectly by damaging EV uptake). If the system is to continue in operation, an ongoing solution to this funding shortfall must be found until commercial viability is achieved. 2. a) CER objectives in relation to EV policy: Do you agree with the CER s objectives for EV policy? ESB notes the objectives stated by the Commission for its decision with regard to the disposition of the assets created as part of the EV pilot. I. Ensure the CER s policy does not create barriers to competition in the market for provision of EV charging services; ESB is committed to supporting the future uptake of electric vehicles in Ireland as a means to decarbonise the transport sector and so ensure that Ireland reaches its carbon emission targets. It is important that the EV industry in Ireland is one in which, when the market is large enough, multiple chargepoint operators and providers will enter and provide competition and choice for EV customers. Additionally, the Alternative Fuels Infrastructure for Transport Directive currently being transposed into Irish law states that: the establishment and operation of recharging points for electric vehicles should be developed as a competitive market with open access to all parties in rolling-out or operating recharging infrastructures. While the majority of the current Irish EV charging system is currently owned by ESB and was developed as part of the EV pilot, there are no regulatory barriers to entry and the technical and commercial restrictions to entry by other parties are relatively modest and would cease to exist upon mass adoption of electric vehicles. The industry is at an early stage, the current business models are challenging - particularly given the low numbers of EVs currently in the market (currently ~2,300) - and therefore it may take some time for other charge point operators and/or providers to invest in EV charging assets in Ireland. However, even today, there is evidence that this may be occurring. For example, Tesla have recently announced their intent to install Supercharger sites in Ireland in advance of their vehicles going on sale here. 29/11/2016 ESBN Electric Vehicle Pilot & Associated Assets 9

10 In an Irish context there are a number of factors which will ensure that the operation of the existing network of charge points developed by ESB will face significant competitive and cost pressure in the future. These include: II. In high-level terms, electromobility must compete against vehicles powered by petrol and diesel on the basis of overall cost competitiveness. Publicly accessible charging infrastructure will also be required to compete against the ability of most drivers to either charge at home (with their own individually-owned private charger and by drawing power from their domestic residential supply) or at other locations (e.g. workplace charging). Indeed, for the great majority of drivers and journeys, publicly accessible EV charge points will not be required. Over the medium term, the extension of vehicle battery range will further reduce reliance upon publicly accessible charging resulting in a higher proportion of journeys that can be completed based on home charging alone. There are currently no legal or regulatory barriers to the provision of public charging services on a commercial basis by private investors. There is evidence that other operators such as Tesla are in the process of providing their own charging infrastructure in Ireland. Nissan already operate their own charging infrastructure which is generally available to the public. While the charge point network is state-of-the-art today, EV charging technology is continuously evolving and may in fact allow new entrants to leap frog current incumbents such as ESB. For example, the last year has seen the advent of High Powered Charging with speeds of KW which would allow an EV drivers to charge their vehicle much more quickly than with even the existing 50kW ESB network of fast chargers. It should also be noted that for an interim period, ESB ecars is willing to offer back office billing and ICT management services for third parties who wish to install publicly available EV charging facilities and offer their own service to EV drivers. (This should be done on a fair and reasonable commercial basis and subject to technical and other operational criteria as agreed). This could also support interoperability via use of the ESB charge point management system. Ensuring the EV charging service is appropriately operated and maintained; EV users need to have confidence that Ireland has a reliable and safe nationwide EV infrastructure that has the capability to be progressed and enhanced in line with industry developments and customer needs. The immaturity of the industry presents a unique set of issues and challenges - whoever runs the network will have to have a range of specialist expertise and a willingness to run the network until such time as the operational costs are covered by a larger number of EV users. The competency of any charge point provider at installing high power charge points and maintaining and operating those charge points will be integral to the safety of the electricity distribution system. This will be key in ensuring that the DSO can meet its licence obligations for the safe, secure and reliable operation of the network. It is our belief that over the last six years that ESB has been in the electric vehicle sector, we have developed key competencies in electric vehicle charge point provision. These range from the development of Machine to Machine protocols, charge point operation and maintenance expertise, Charge Point Management System (CPMS) development and implementation and issue resolution processes to name just a few. This coupled with the broader experience of ESB at maintaining and operating national infrastructure programmes, we believe, makes ESB uniquely qualified to fulfil this objective as set out by the CER. 29/11/2016 ESBN Electric Vehicle Pilot & Associated Assets 10

11 III. Ensuring the best use of the assets in terms of facilitating the growth of the EV industry; The electrification of the transport will have many benefits for the DUoS customer in the longer term by reducing the average unit price by increasing load factors on the transmission and distribution networks. EVs will also help to facilitate the addition of intermittent renewable power onto the distribution and transmission system and in time may be able to provide grid balancing services. The mass uptake of electric vehicles will also have broader societal benefits such as helping to mitigate against climate change, improved air quality and reduced imports. The current ESB public charge point network covers a nationwide footprint that provides for travel in an electric vehicle across the country and indeed is fully inter-operable with the Northern Ireland system. The majority of towns with a population of 1,500 or more now have at least two installed charge points, this was seen as necessary to advance the adoption of electric vehicles and so ensure that EV driving is possible anywhere in Ireland. It also created a highly visible presence to reassure would-be buyers of EVs and EV drivers that access to charging would not be an issue hence mollifying range anxiety. Many of these charge points are in sparsely populated areas with few current and potential EV drivers. Given this and due to short-term commercial considerations, any entity that purchases the current infrastructure, may decide to shrink the network and only continue with charge point provision in urban areas. It is our belief that these possible outcomes should be carefully considered. As set out below, the analysis conducted by ESB ecars for ESB Networks demonstrates clearly that increased uptake of electric vehicles could benefit electricity customers through higher load factors and lower curtailment costs. IV. Ensuring any costs or benefits seen by the DUoS customer are appropriate As set out in the pilot, ESB Networks, through ESB ecars has produced the report Preparation for EVs on the Distribution System and this body of technical research which has been provided to the CER will inform electricity network planning into the future, to the benefit of current and future customers. In addition to the direct benefits provided by this extensive report, the resulting charge point network can provide support for the large scale uptake of electric vehicles in Ireland and when this occurs electricity demand will increase and the ability of the system to absorb intermittent renewable energy will be enhanced, thus benefitting all customers through higher load factors and lower curtailment costs. As the analysis in WP5.1 of the Pilot Project Report (Parameterised Models to Support DUOS Impact analysis) found, the widespread adoption of EVs in Ireland would benefit all DUoS (and TUoS) customers over time by reducing the Average Unit Price (AUP). These benefits come from increasing load factors due to greater throughput of electricity through the national transmission and distribution networks. Moreover, this analysis also found that these benefits to all electricity users are maximised in scenarios where both EV uptake occurs more quickly and when EV drivers make greater use of their vehicles (e.g. by driving longer distances). Furthermore, to achieve the decarbonisation of transport a large part of the private car fleet will need to be decarbonised, and electrification is the most obvious route to that goal. Ireland has led in Europe in preparing for this transition through the Electric Vehicle Pilot and the resultant charge point network is one of the few nationwide charging infrastructures anywhere in the world. The Alternative Fuels Infrastructure for Transport Directive, which is currently being transposed into Irish law, further strengthens the case for a national EV infrastructure. It obliges member states to provide publicly accessible charge points for electric vehicles and plan for an increase in the number of electric vehicles. Ireland is well placed to comply with this Directive and little if any additional expenditure will be needed. In the event of ESB ownership of the assets (under either a regulated or commercial model), ESB have set out a number of objectives or conditions that could provide additional value to the electricity customer over and above what has already been delivered and are outlined in section 2C below. These include: 29/11/2016 ESBN Electric Vehicle Pilot & Associated Assets 11

12 Provide an annual report to the CER or Government entity on the use of the charging infrastructure and advancements and changes in the industry. In addition, and for an interim period, ESB could offer back office billing and ICT management services for third parties who wished to install publicly available EV charging facilities and offer their own service to EV drivers. (This should be done on a fair and reasonable commercial basis and subject to technical and other operational criteria as agreed). This would also ensure interoperability via use of an ESB charge point management system. V. Open access to charging points as a way to facilitate National Policy in relation to EVs. With regard to the above objective we are taking the words open access to mean what is termed as interoperability or roaming in some European jurisdictions. This is defined as ensuring that no matter what charge point a driver uses within an area that it is possible to access it using a single method of access. This has been an issue in other regions such as the UK, where islands of network have been developed in a fragmented manner. As a result, this has led to a need for multiple charge point access cards or contracts with multiple providers when travelling across the UK. The charge point network in both Ireland and Northern Ireland is accessible today using one charge point access card creating an integrated and seamless experience for EV drivers making cross-border journeys. In this regard, ESB would continue to work to support this objective and we would advocate that provisions are put in places to ensure that all new charging infrastructure installed in Ireland is interoperable with the current existing network. We would also point to Article 4.9 of the Alternative Fuels Infrastructure for Transport Directive which states that all recharging points accessible to the public shall also provide for the possibility for electric vehicle users to recharge on an ad-hoc basis without entering into a contract with the electricity supplier or operator concerned. This will obligate the charge point operator to allow EV drivers to charge at a charge point as and when they need to, without signing up to contract for an extended period or multiple charges. The implementation of this directive will further facilitate ease of access to the charging infrastructure. Furthermore the National Policy Framework developed for the Alternative Fuels Infrastructure for Transport Directive has forecast a necessary trajectory of 20,000 EVs by 2020 rising to over 800,000 in A robust, well run and interoperable charge point network will be necessary in order to facilitate this level of growth in electric vehicles. It should also be noted that when these figures materialise, many more charge point providers and operators will enter the market. In this case, we would reemphasise our earlier point that it will be necessary to ensure that as the network of charge points in Ireland grows and that as the number of operators increases, interoperability is maintained to allow for the most efficient use of the infrastructure installed. (i.e. that it is possible for all EV drivers to access any charge point) b) Are there other objectives the CER should consider? ESB ecars has stated additional perspectives and considerations in the Preface to this document. However, we would also note the CER s comments in Section 2.2 of the Consultation with regard to the legislative basis for supply of electricity via charging points. We agree with the analysis that the operator of the infrastructure can be considered to be a final customer under the Electricity Regulation Act 1999 and so the licensed supply of electricity occurs when an electricity supplier supplies electricity to the charging point. We note however that this consultation is silent with regard to the onward sale of electricity by the EV operator to the vehicle user. It appears to ESB that this onward supply of electricity should not be deemed to be a prohibited activity, (i.e. there should be no requirement for the operator 29/11/2016 ESBN Electric Vehicle Pilot & Associated Assets 12

13 of a charge point to hold a supply licence). However, given that, as acknowledged by CER, this set of circumstances was not envisaged at the time of drafting the legislation, the appropriate application of the existing legislation is unclear. Accordingly, ESB ecars requests that CER might clarify the position in this regard either by way of interpretative note, or if considered necessary, by way of a clarifying legislative amendment. ESB ecars has previously pointed out this issue to CER in a previous communication where we stated that: Unlike other jurisdictions, current legislation in Ireland is silent on the question of reselling electricity that has already been purchased from a licensed supplier. The licensing requirements with regard to supply were written at a time when the widespread adoption of electric vehicles and the consequent need for charging services outside of individual residences were simply not envisaged. Accordingly, the position as regards whether a supply licence is required for the proposed role of ESB ecars as an owner and operator of EV charging infrastructure, and for other potential entrants who wish to provide charging services, should be clarified. Finally, we are unclear as to the point being made by the CER in relation to Article 4(8) of the Directive not being consistent with existing legislation. The CER indicates that the text of Article 4(8) introduces a distinction between an operator of the infrastructure, who must be free to contract with a supplier, and the supplier whose customer is the operator. The CER also notes that this provision makes clear that the EV operator has a contractual relationship with the EV user. ESB agrees with this interpretation, and our reading of this requirement is that the EV operator must be free to choose its supplier. We are not clear however as to the inconsistency between this provision and existing Irish legislation which is being alluded to by CER. Perhaps this relates to the above point regarding onward supply by the operator of the infrastructure to the end user. Again, ESB Ecars would welcome clarity from the Commission on this issue- as a means to reduce the administrative burden and uncertainty for potential entrants. c) Do you consider conditions should be attached to the ownership of the assets? If so, what kind of conditions should be added? As outlined earlier, Ireland requires a robust, reliable and safe charge point network to be able to grow the number of EVs and so meet its National, European and International targets. In the event of ESB ownership, ESB would consider committing to certain objectives (to CER or to ESB Networks as appropriate) that would be in the interests of T/DUoS customers and that would support the achievement of Irish public policy objectives. These objectives might include: The ongoing and safe operation of the charge point network is of the upmost importance for EV drivers and the electricity grid. ESB s intention would be to continue to operate the charge point network in a safe and reliable manner. Provide an annual report to the CER or Government entity on the use of the charging infrastructure and advancements and changes in the industry. Aim to retain the size and footprint of the current network so as to cater to increased EV numbers if and when necessary. Maintain the interest of CER and the DUoS customer in the business (e.g. claw back provision through ESB Networks that would apply if any future sale should occur) In addition, and for an interim period, ESB could offer its back-office billing and ICT management services for third parties who wished to install publicly available EV charging facilities and offer their own service to EV drivers. (This should be done on a fair and reasonable commercial basis and subject to technical and other operational criteria as agreed). This would also ensure interoperability via use of the charge point management system. 29/11/2016 ESBN Electric Vehicle Pilot & Associated Assets 13

14 It is our belief that several of these objectives (e.g. retaining a nationwide and extensive network of chargepoints including in areas with few current and existing EVs) could not be pursued by any operator seeking to maximise commercial returns from these assets but would represent real and significant financial benefit for DUoS customers (e.g. by supporting EV uptake which would reduce network charges). 3. a) ESB ecars Proposal: Do you agree with the ESB ecars proposed four options? Please note our response to question 3b, below. b) Are there other ownership models that the CER should consider? Originally, it had been the intention of ESB to commence operation of the EV assets on a commercial basis upon conclusion of the EV pilot. This strategy had been predicated on EV numbers increasing in the region of 20,000/25,000, which is the required critical mass to facilitate commercialisation in Ireland. However, the expected level of growth in electric vehicles has not materialised during the last number of years due to a number of reasons, including the failure to introduce key policy measures to encourage the growth of EV sales as has happened in other jurisdictions. Consequently, it is not practical for ESB to continue to carry the significant costs associated with operating this nationwide EV infrastructure since January 2016 and providing service to drivers without clarity on policy and funding. Given the current immature nature of the EV industry, along with the very significant risks to the TUoS/DUoS customer, EV drivers and to the achievement of public policy targets that would arise from a collapse of the network, we also believe that the Commission should consider implementing an arrangement whereby the network is operated and supported on a cost funded basis for a limited and defined period of time. This arrangement could be reviewed periodically and made contingent on the development of an EV market large enough to support a competitive and vibrant EV charging industry. Alternatively, or additionally, given the EV network s crucial role in also helping to underpin the achievement of public policy goals, the Commission could work with Government, OEMs, and other stakeholders, to put in place alternative support and funding regimes for the network (and for any future EV infrastructure that may be required to be built ahead of demand or under Ireland s EU policy obligations). Consistent with our actions during the past 12 months since the conclusion of the pilot, and as an interim measure, ESB is prepared to ensure that service to Irish EV drivers is not interrupted pending resolution of financing and policy issues. c) What is your recommended option? Based on our long term commitment to the development of electromobility in Ireland, as well as the unique capabilities that we have developed in this emergent field and given the critical short-term and long-term risks associated with alternative ownership options, we believe that it is in the interests of all electricity customers, and in the general national interest, that the network of assets developed as part of the EV pilot are retained within the ownership of ESB Group so that the nationwide footprint of the network is retained and that the quality of service provided to drivers is not interrupted. Notwithstanding its benefits for the TUoS/DUoS customer and for the achievement of Irish climate and air quality policy objectives, the continued operation of this system is not currently viable on a commercial basis given the small number of EVs and uncertainty regarding their growth in the short- and medium-term. This has been widely recognised elsewhere in Europe, where the great majority of publicly accessible EV infrastructure has been underwritten by regulatory or governmental support pending large-scale uptake of electric vehicles. However, and as outlined in the Preface, in the long term we believe that there are some policy and legal obstacles towards establishing and operating these assets as a regulated monopoly. In addition, EV charging costs have a very large operating expenditure component while charging infrastructure asset values are small in relative terms and depreciate rapidly. Moreover, the EV and EV charging industry are evolving and innovating with rapid changes to technology, business models and technical standards which are unlikely to be able to be 29/11/2016 ESBN Electric Vehicle Pilot & Associated Assets 14

15 accommodated in a timely fashion within multi-year price reviews. Finally, and as discussed earlier, we do not believe that when the market develops to scale that the provision of public EV charging services would be a natural monopoly hence removing the policy rationale for this option as a permanent structure for this industry. A solution whereby regulatory oversight/support or some other arrangement for support- is instituted on a transitionary basis, would also allow the Commission to ensure that any eventual exit strategy is consistent with those other objectives outlined by the Commission above (e.g. at time of exit, the Commission could given a full assessment of the situation at that time make arrangements to ensure that financial value is delivered for the DUoS/TUoS customer or that any market power concerns are addressed). d) Under your recommended option how would CER ensure that the current value of the assets is adequately reflected? There is a national interest in the existence of an extensive, visible and reliable publicly accessible charging infrastructure, and it is for this reason that in virtually every country in Europe most public (and, in some cases, private residential) charging infrastructure has been 50% to 100% funded by national governments. In Ireland, the mass uptake of electric vehicles and the current charge point network will have many benefits for DUoS customers and society as a whole, including: The delivery of a 600 page report Preparation for EVs on the Distribution System Higher electricity demand that will increase and leverage renewable energy sources benefitting all customers through higher load factors and lower curtailment costs. The unprecedented opportunity to progress the decarbonisation of the transport sector and thus contribute to the protection of the environment. Alleviation of air quality issues Ireland s obligations with regard to the provision of EV infrastructure as part of the Alternative Fuels Infrastructure for Transport (AFI) Directive for 2020 have already been met. When considering the current value of the infrastructure the following points are also worth noting: In accounting terms the remaining assets will shortly be fully depreciated. Parts of the network comprise of legacy charge points that will need to be swapped out for newer, more reliable models in the coming years. Under the AFI Directive any charging infrastructure being renewed must be fitted with equipment to the standards set out in that Directive. For a number of the charge points, this will mean that instead of being an asset with a positive value these would represent a financial liability to any acquirer. In order to give national coverage and ensure that EV driving is possible in all parts of Ireland the decision was made to roll out a national infrastructure. If short-term commercial considerations were paramount, the alternative would be to restrict charge points to major urban centres and to a small number of significant intercity routes. Many of these charge points provide geographic coverage, but are highly unlikely to ever be commercially viable even with large increases in EV numbers. In countries where EV drivers have their own overnight parking locations (e.g. home) this is the predominant method of charging. The rapid increase of battery capacity (and a result EV range) which is happening will make home charging even more predominant in Ireland in the coming years. We would also draw attention to the objectives which ESB ecars has set out in Section 2(c) above, and which we believe would deliver very significant long term financial value for DUoS and TUoS customers. 29/11/2016 ESBN Electric Vehicle Pilot & Associated Assets 15