How fast can GCC economies build an electric vehicle charging network?
A handful of business models can light up growth prospects for charging networks
Fossil fuels have been the backbone of industry and economic growth, but their emissions have eroded the Earth’s natural defenses. Responsible for around a quarter of all greenhouse gas emissions, the transport sector has been part of the problem - but through electrification it can also be an important part of the solution.
Arthur D. Little’s ‘Global Electric Mobility Readiness Index 2023’ offers encouraging insight into the GCC’s appetite for electrification. Notably, the UAE and Qatar rank 7th and 9th, respectively, on the global index which covers 35 markets across continents.
Dubai aims to introduce approximately 42,000 electric vehicles (EVs) onto the emirate’s roads within the next six years. And the country at large has developed its charging infrastructure, with around 700 charging stations currently operational. Qatar has achieved its target of electrifying 25 per cent of its public transit bus fleet and the adoption of EVs is encouraged through green financing options.
Saudi Arabia’s rank of 23 on the index belies the significant e-mobility initiatives underway. Its Public Investment Fund launched Tasaru Mobility Investments, designed to accelerate the development of Saudi Arabia’s EV and autonomous mobility ecosystem.
The Kingdom has also launched its first national EV brand, Ceer, in partnership with Foxconn, and has entered the world of electric motorsports.
Challenges to e-mobility
The GCC has made important steps along its journey to e-mobility. However, widespread uptake among populations hinges on the region’s ability to overcome significant infrastructure hurdles.
Among the challenges is charging network density. Air-conditioned vehicles with high energy consumption require dense infrastructure, and while homes and workplaces are often well-served with AC charging points, there is a need for high-speed public DC charging points across the region.
When it comes to private charging, there is also a need for grid architecture and stability to be reviewed if the potential of e-mobility is to be realized.
On the demand side, vehicle electrification will substantially increase electricity requirements. In the case of local charging, network overloading risks emerge if large numbers of EVs are charged in the same place, at the same time.
To mitigate this risk, utilities must invest in re-enforcing the grid and take active demand-side management measures to limit the concurrent peak demand.
Making the business case
Despite the challenges, business cases are emerging that highlight the potential profitability of EV infrastructure investments.
As outlined in ADL Viewpoint, ‘The Evolution of Public EV Charging’, there is scope for charge point operators (CPOs) to add locations to their portfolios, acquire smaller CPOs, offer turnkey solutions to customers, and even expand into the field of energy services.
Mobility service providers (MSPs) are diversifying by providing B2B fleet solutions and offering their charging networks as white label solutions to third parties. Some MSPs are also including charging as part of an integrated mobility platform or adding intelligent energy services, with cost savings for users.
Two business models for new services are emerging: V2G and V2H. In a vehicle-to-grid (V2G) service, an EV battery is used to provide flexibility to the electricity grid and the vehicle owner is compensated accordingly. The vehicle-to-home (V2H) service involves the use of an EV battery as an energy supplier in instances of network overload, for peak shaving, or as an energy management system that reduces costs.
As GCC countries continue to develop their e-mobility ecosystems, decision-makers may wish to consider the following steps:
- Integrate mobility and renewable energy strategies and respective stakeholder ecosystems.
- Conduct simulations of EV charging demand based on EV market models and traffic simulations.
- Stress-test energy grids, based on EV charging simulations.
- Investigate energy storage solutions for technical and economic feasibility.
The road to electrification will not be smooth, but under the weight of a global climate crisis, opting out of the race is off the table. In the GCC, the journey has begun; sustainability permeates national visions and EV innovations are being tried and tested regionwide.
There are significant challenges ahead - but where there is investment and political will, there is a way.