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Councils may fund grid upgrades for EVs

Electric Vehicles

21 September 2020

The Greater Cambridge Partnership (GCP) may invest in the local electricity network to ensure it can support an anticipated growth in electric vehicle numbers.  

The GCP comprises three local authorities: Cambridgeshire County Council, Cambridge City Council and South Cambridgeshire District Council. The proposal to invest in the grid follows a report by consultant Asset Utilities that concluded the area’s electricity network will not cope with future demand. 

UK Power Networks (UKPN), the electricity distribution network operator (DNO) for the Greater Cambridge area, was subsequently commissioned to identify potential interventions. It concluded that additional demand, notably driven by the electrification of transport, could almost triple the existing electricity demand in the Greater Cambridge area, from 240MW to 710MW by 2031. 

“It is clear that the electricity network as designed, is unable to meet the future electrical demand requirements or the changing face of technology (EV connections) in Greater Cambridge,” said UKPN.

It identified a need for three  new substations and a new East Cambridge interconnector. The preliminary estimated cost, excluding land acquisition, of the investments is about £44m. Land could add a further £1.5m, the GCP believes.

The GCP says the case for public sector investment in electricity capacity is justified because the regulated market cannot guarantee the necessary capacity increase in advance of demand materialising. 

“Utility providers have a statutory duty to deliver required upgrades and reinforcements within their networks to support the delivery of growth,” says the GCP. “However, they are regulated by Ofgem and constrained to operate reactively to demand.

“They are only able to commit to designing upgrades on their networks when outline planning consent is available and they have been approached by developers and are certain that development will come forward to avoid the risk of ‘stranded’ assets. 

“This can create significant delays in housing and commercial developments and it can take several years to deliver power infrastructure, thereby delaying growth, renewables projects and the electrification of transport.” 

The GCP says if it does not proceed with the investment, “there is a risk that growth will be inhibited and partners’ net zero commitments will be jeopardised”.

It may be able to recoup some of its expenditure from developers who make use of the capacity for the first ten years from activation of each substation. 

“Other local authorities have agreed, or are in the process of agreeing, a cost recovery arrangement with their DNOs that will enable them to recover public sector forward-funded investment from developers who subsequently connect to the council-funded grid substations.”

The GCP has been in contact with Central Bedfordshire Council and authorities in Ebbsfleet, Kent, about similar projects. 

“There is also a possibility of obtaining a contribution from UKPN as part of their 2023-2028 business investment planning, but this is by no means certain.”

It envisages financing the investment at least in part via a loan, so that its capital grant from Government can be used for other investments.

The impact of Covid-19 will have to be considered before a final investment decision is made. “Although the Asset Utilities and UKPN reports highlight strong demand, these analyses would need to be reviewed in the light of the impact of Covid-19.” 

The GCP is to procure consultants to explore the issues in more detail. Findings will be presented to a meeting of its executive board next March. 

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