Electric vehicles show potential in the UAE
Uptake of electric vehicles will help to integrate the UAE’s transport and electricity sectors
Electric vehicles (EV) are increasingly visible on the UAE’s roads. The sharp drop in the cost of EVs in the past five years has encouraged increased adoption. Management consultancy AFRY estimates that the total cost of buying and running a Tesla Model 3 is $0.34/km at current electricity and petrol prices. This is comparable to many petrol and diesel cars. Global production and competition will increase in the coming years and this will drive further EV cost reductions.
EVs offer additional benefits through reduced air pollution associated with petrol and diesel vehicles. However, perhaps the most interesting benefit is the potential for EVs to integrate the transport and electricity sector like never before.
In Dubai, the aim is for 10 per cent of vehicles to be electric or hybrid by 2030. If this target was to be mirrored across the UAE, AFRY estimates there would be a total of 3GW of battery storage in the vehicle fleet.
Most vehicles spend most of their time stationary. Stationary vehicles could be connected to the grid using emerging vehicle-to-grid (V2G) technology, which could yield benefits of more than $100m a year to the power sector through avoided investment in thermal and stationary battery capacity.
Solar photovoltaic (PV) capacity is also expected to increase quickly over the next five years, which will trigger associated power system operation challenges. There will be a need for increased inertia, reserve and ramping services. EV battery capacity could contribute to the flexibility the system will need.
Potential challenges
There remains several challenges before EVs can become mainstream, however. There are not yet appropriate models that would appeal to the UAE mass market, where a car is a status symbol.
Cars such as the Tesla Model 3, Jaguar i-Pace, Nissan Leaf, Chevy Bolt and Renault Zoe are only going to appeal to a small proportion of the driving population. A greater number of sport utility vehicle models with GCC specifications are needed in order to appeal to a broader consumer base.
Alongside new models, the dealer and maintenance network will need to give prospective buyers and owners the information and services they need throughout the EV lifecycle. It will inevitably take time to build collective knowledge within the UAE car industry.
People also do not want to change the way they drive. To consider the switch to an EV, drivers in the UAE need to be confident that they do not need to significantly change their driving habits.
If a petrol tank is nearly empty, a stop at the pump may only take five minutes. In contrast, an EV can take 40 minutes to charge to 80 per cent at an ultra-rapid charging station. Most drivers will not accept this delay.
In order to make the switch more attractive, drivers need to be able to charge their car at locations where they already spend long periods of time. There are about 650 charging points in the UAE, but many of these are located at government buildings and hotels, which are not convenient for many EV owners.
Data on driving and charging patterns needs to be collected and analysed in order to identify the best locations and roll-out of charging stations. Machine learning techniques to analyse large datasets are an obvious tool to aid such analysis.
Charging tarrifs
EV charging tariffs also need to reflect the system cost. Dubai Electricity & Water Authority (Dewa) has set a flat tariff for EVs of 29 fils a kilowatt-hour (kWh) at their charging stations, and this is being waived for non-commercial users until the end of 2021.
Home charging in Dubai will be priced at the standard retail tariff of 29.5-44.5 fils/kWh, depending on which residential rate is applied. In other emirates, there is no specific tariff for EV charging.
The EV tariff should ideally be closely linked to the underlying marginal cost – the cost of generating one more unit – of electricity, rather than at a flat rate. AFRY’s modelling of the UAE’s electricity sector suggests that in the next five years the marginal cost will become much more variable due to the expansion of solar energy, and could even fall to zero in periods of high solar output.
This makes having the correct tariffs that incentivise EVs to respond to changing system conditions even more important. The EV tariff structure could also potentially incorporate a credit that could be offset against future charging costs, which provide for reserve and generation to the grid.
Notably, the charging ownership and operating model does not incentivise private sector participation. Currently, the majority of charging points are owned and operated by government entities, such as Dewa’s 240 charging points in Dubai.
Private sector participation could encourage innovation and lead to a more rapid roll-out and better siting of charging points. There are likely to be multiple models employed if the regulatory framework allows.
Finally, in the UAE, the power sector is regulated at an emirate level. There are very different arrangements in place in Dubai and Abu Dhabi. Car owners, and charge-point operators, will want to be able to drive and do business across the UAE, so greater coordination between relevant regulatory bodies is needed if the full potential of EVs is to be recognised.
About the authors
Benedikt Unger is an energy, transport and decarbonisation expert in AFRY’s global team and Brendan Cronin is head of AFRY Management Consulting in the Middle East
Source: meed
