Who Ultimately Pays for and Who Gains from the Electricity Network Upgrade for Electric Vehicles (EVs)?

Turner, Karen and Alabi, Oluwafisayo and Calvillo, Christian and Figus, Gioele and Katris, Antonios (2019) Who Ultimately Pays for and Who Gains from the Electricity Network Upgrade for Electric Vehicles (EVs)? Working paper. University of Strathclyde, Glasgow.

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    Abstract

    We investigate the question of who ultimately pays and who gains from upgrading the power network to facilitate the roll out of EVs required, for example, under ambitious targets set by the Scottish and UK Governments. We use a multi-sector computable general equilibrium (CGE) model for the UK economy to consider a network upgrade and EV penetration scenario for the period to 2030. We find that investment to enable network upgrades results in net negative impacts on real income available for spending across all UK households. This is due to the impact of time-limited large-scale investment on economic activity and consumer prices in the presence of capacity constraints, exacerbated by costs being passed on to electricity consumers through higher bills. But the lowest income households – the group of greatest concern to policymakers – are impacted least and initially enjoy small net gains under some scenarios. Moreover, the EV uptake delivers sufficient gains to deliver net positive impacts on all household incomes, with sustained expansion in GDP and employment across the economy. The key driver is a greater reliance on UK supply chains with the shift away from more import-intensive petrol and diesel fuelled vehicles towards electric ones.