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

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 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.


Context/background
• Electrification of transport in general, and more specifically the transition from conventional to electric vehicles (EVs) in delivering private transportation services, is crucial to the UK's decarbonisation efforts and contribution to global emission reduction (CCC, 2019) • Following the UK Parliament's legislation of a 2050 net zero target (BEIS, 2019), a previous 2040 target to end the sales of new conventional cars and vans was brought forward to 2030 with all new cars and vans being fully zero emission from 2035 (UK Government, 2020) • If such a pathway is to be sustainable in a political economy setting, it is necessary to understand the potential wider economy and distributional consequences of extensively electrifying a previously fossil fuel powered activity • Crucial question : is how and to what extent the level and timing of investment to support the projected EV rollout not only enables targeted emission reduction but also affects the pathways and nature of economic expansion and economic wellbeing?
• These will come at some cost to households, industries and the economy-but there maybe opportunity to capture benefits and/or unlock value in the wider economy  We focus on electricity network upgrade investment only required for projected EV rollout up to 2050 and develop three energy system scenarios : -Slow EV uptake (£11billion) -Central EV uptake (£10billion) -Fast EV Uptake (£8billion) ➢ 1/3 of investment spend in the UK construction sector ➢ Full cost of the investment spend passed to all consumers via higher bills until the full investment cost is repaid  • Time-limited net contraction in the economy emerges and persists through the remainder of the enabling stage to 2090 • Spending power of UK households' contracts throughout extended period of adjustment as CPI rises and real earnings and spending fall • Impact of rising labour costs during most of the upgrade period, exacerbated by the electricity price burden of recovering the network investment costs which acts to reduce the competitiveness of the UK economy

1.
How will a more rapid rollout of EVs in different timeframes impact the economy-wide picture of who ultimately pays and gains? 2. How will the picture in (1) change if the manufacture of EVs (at UK and global levels) cannot meet the demand implied by the projected rollout, in different interim timeframes and overall?

Figure 1 .•
Figure 1.Evolution of the electricity network upgrade spend and repayment for 'central' scenario to enable the 100% EV rollout by 2050

enable emissions reduction • Realising stage: with
Net Zero Principles Framework which can be used as a tool for policy makers.It describes:• Enabling stage: before emissions reductions can begin, need to invest in, install and facilitate operation of new equipment, infrastructure and/or systems capability to this capacity and capability in place, we can actually realise emissions reductions by working with this new capacity in how we live and work.Secondly, the outcomes of the UK TIMES on the required investment costs, and efficiency gains realised through using EVs for private transport, is used to inform our core multi-sector economy- • Fuelling of electric vehicles can exploit strong domestic supply chain capacity of UK electricity industry• A shift to EVs can unlock and increase value in different parts of the UK economy Turner, K.,Katris, A., & Race, J. (2020).The need for a net zero principles framework to support public policy at local, regional and national levels.Local Economy, 35(7), 627-634.https://doi.org/10.1177/0269094220984742Ourcoremethod involves two models:• First, an energy system model (UK TIMES) is used to simulate scenarios involving different assumptions around extent of 'smart' charging capability and consumer response for projected EV rollout and the associated extra investments required •

wide UK ENVI Computable General Equilibrium (CGE) model
Output: outcomes reporting on activity, prices, incomes and fiscal variables in different sectors of the economy; household distribution effects, all reporting via a range of social welfare indicators -policy narrative development drawing on model outcomes Data inputs/scenario framing : 'top down' scenario and/or 'bottom up'