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

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  • Alabi, Oluwafisayo
  • Turner, Karen
  • Figus, Gioele
  • Katris, Antonios
  • Calvillo, Christian
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 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.

Suggested Citation

  • Alabi, Oluwafisayo & Turner, Karen & Figus, Gioele & Katris, Antonios & Calvillo, Christian, 2020. "Can spending to upgrade electricity networks to support electric vehicles (EVs) roll-outs unlock value in the wider economy?," Energy Policy, Elsevier, vol. 138(C).
    • Handle: RePEc:eee:enepol:v:138:y:2020:i:c:s0301421519307049
    DOI: 10.1016/j.enpol.2019.111117
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    References listed on IDEAS

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    Cited by:

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    3. Alabi, Oluwafisayo & Turner, Karen & Katris, Antonios & Calvillo, Christian, 2022. "Can network spending to support the shift to electric vehicles deliver wider economy gains? The role of domestic supply chain, price, and real wage effects," Energy Economics, Elsevier, vol. 110(C).
    4. Nieto, Jaime & Brockway, Paul E. & Sakai, Marco & Barrett, John, 2024. "Assessing the energy and socio-macroeconomic impacts of the EV transition: A UK case study 2020–2050," Applied Energy, Elsevier, vol. 370(C).

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    More about this item

    Keywords

    Electric vehicles; Electricity network upgrades; Computable general equilibrium; Domestic supply chains;
    All these keywords.

    JEL classification:

    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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