Can spending to upgrade electricity networks to support electric vehicles (EVs) roll-outs unlock value in the wider economy?

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Abstract

We investigate the question of whether spending to enable ambitious EV roll-out programmes can in fact generate net gains across the wider economy. We use a multi-sector computable general equilibrium (CGE) model for the UK economy and focus on the need to upgrade electricity networks to support an initial EV penetration scenario for the period to 2030. We find that large scale spending and cost recovery for network upgrades is likely to result in net negative impacts on key macroeconomic indicators, including real income available for spending across all UK households. This is due to a combination of time-limited network upgrade activity in the presence of capacity constraints combined with the need for costs to be passed on to electricity consumers through higher bills. But the lowest income households – the group of greatest concern to policymakers – suffer the smallest losses. Moreover, the EV uptake delivers sufficient gains t that 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.
Original languageEnglish
Article number111117
Number of pages11
JournalEnergy Policy
Volume138
Early online date29 Nov 2019
DOIs
Publication statusPublished - 31 Mar 2020

Keywords

  • electric vehicles
  • electricity network upgrades
  • computable general equilibrium
  • domestic supply chains

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