05.03.2020Electric vehicles set to place greater demand on our energy needs

The costs of energy generation and consumption have been hot topics in Australia for some time. A dramatic increase in gas and electricity prices for households and businesses over recent years has had adverse consequences on liveability for many Australians, and the country’s economic competitiveness.

The impact and implications of rising energy costs have been well-documented, and proposals have been made on how we must address this. However, there has been limited public discussion about how Australia’s energy infrastructure can meet the expected demand of electric vehicles (EVs), which are now increasingly penetrating the Australian market. The Australian Energy Market Commission (AEMC) has just highlighted this challenge, releasing its latest issues paper; 2020 Retail Energy Competition Review: Electric Vehicles.

The publication of this paper is timely. Declining costs of EVs, and encouragement of their uptake through the introduction of government policies, has seen their popularity in Australia rise.[1] While local sales of EVs have been modest compared to global trends, 6,718 EVs were sold nationally in 2019, representing a 203% increase from the previous year.[2]

The electrification of Australia’s passenger vehicle fleet will have far-reaching implications for Melbourne, and Australia. The expected increase in electricity consumption will change underlying demand; placing upward pressure on prices, and testing the resilience of our electricity grid.

Ensuring our energy grid is resilient and can meet peak electricity demand will be vital,and must be planned for. Public charging stations have an enormous impact on the electricity grid. It was determined that a charging station constructed in Adelaide in 2017, which had 8 chargers, consumed the equivalent of 100 new homes of electricity.[3] Combined with the fact that there was a 143% increase in the number of public charging stations constructed in Australia between June 2018 and July 2019,[4] it is clear that authorities will need to address Australia’s energy challenges as a matter of urgency.

The successful transition to EVs could have significant benefits for Australian society. Hydrogen fuel cell vehicles, battery-electric and plug-in electric vehicles – known collectively as zero emission vehicles (ZEVs)[5] – could not only help lower transport costs, they will help reduce carbon emissions, and emit less pollution. It is estimated that by 2046, 27 million tonnes of greenhouse gas emissions could be eliminated in Victoria, should we successfully transition to an entire fleet comprising ZEVs.[6]

Committee for Melbourne’s Transport Taskforce will be releasing a report in the upcoming months which, amongst other issues, addresses the need for Melbourne, and Victoria, to prepare for the expected widespread market penetration of EVs. The Taskforce Steering Committee, which is chaired by Ishaan Nangia, Partner at McKinsey and Company, comprises various organisations from the Committee’s membership base, including Arcadis, Ashurst, Commonwealth Bank of Australia, Good Cycles, Jacobs, Melbourne Water, Metro Trains Melbourne, Monash University, Port of Melbourne Corporation, RACV, RPS Group, and Transurban.

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