Switching Centrica to an electric vehicle fleet: your questions answered
Steve Winter, Centrica’s Head of Fleet (UK) answers our questions on how Centrica is making the business transition to sustainable transport and the lessons learnt so far.
Note: This interview was conducted before the announcement of the purchase of 1,000 Vauxhall Vivaro-e vans by British Gas. The largest order of commercial electric vans in the UK to date, this order represents a leap forward in electrifying our fleet of 12k vehicles, the UK's 3rd largest.
As one of the first businesses to adopt electric vehicles (EV) at scale across its global fleet, Centrica has first-hand knowledge of implementing a sustainable transport strategy. This expertise informs the continued development of our EV Enablement solution for other organisations who are making the transition to cleaner transport.
We interviewed Steve Winter, Head of Fleet for Centrica, who shares his insights and experience on managing the company's global shift to electric vehicles.
Q. What progress has Centrica made in transitioning to an electric fleet?
A. We've been using electric vehicles and plug-in hybrids for more than 6 years as part of our wider fleet of approximately 12,000 vehicles worldwide. Collectively, 4% of our vehicles have moved to EV, clocking up 1.75 million miles. Most of our fleet is UK based, but we have around 1,000 vans in North America and numbers are quickly growing across Ireland and other European countries.
Q. Does petrol and diesel have a future in Centrica's transport plans?
In the UK, we plan to go fully electric by 2027/28 and to halt purchasing Internal Combustion Engine (ICE) vehicles in 2024. By the end of 2022 we aim to add another 2,000 EVs to our fleet. To maximise flexibility during this transition period, we've moved to 3 year leases (from 6 years) on all diesel vans.
Q. Why did Centrica make the decision to switch its fleet to EV?
A: Transport is responsible for 27% of the EU's total CO2 emissions and commercial vehicles are responsible for 20% of all vehicle related greenhouse-gas emissions, despite accounting for only 5% of road traffic. With the scale of this emissions problem, our biggest motivation is environmental. As a sustainable energy organisation it's important for us to be ahead of the curve and to demonstrate practical leadership in tackling both air pollution and carbon emissions from ICE vehicles
Moving to green transport is a key part of our sustainability strategy and essential to achieving our carbon reduction targets. Our 'Responsible Business Ambitions' include a commitment to reducing Centrica Group's internal carbon footprint by 35% by 2025, demonstrating that we're on track with Paris goals in 2030 and developing a path to net zero by 2050.
With the size of our fleet (our British Gas company has the third largest commercial fleet in the UK), we can make a huge impact on decarbonising emissions from travel.
There are also regulatory and commercial drivers behind our decision making. For example, the UK government will ban the sale of new petrol, diesel or hybrid cars and vans by 2040 and is consulting on bringing this date forward to 2035.
There are a number of tax benefits, incentives and grants available for electric company vehicles. For example, avoiding charges when driving through low and ultra low emission zones, which are a growing feature of city centres.
We are using our own Ev fleet transition experience to support businesses with an end-to-end solution to making their switch to electric.
Q. How is Centrica benefiting from EV adoption?
A. In our experience, the total cost of vehicle ownership is lower. Even though EVs currently cost about £1,000 more to lease, when you factor in lack of fuel cost and lower maintenance requirements, it is cheaper overall.
Since EVs have fewer mechanical parts than ICE vehicles, there's less that can go wrong. We have been really impressed with the reliability of our vans and cars. There have been no breakdowns and no battery replacements required to date. We tend to generate better data from our EVs. This informs a proactive maintenance approach and enables us to identify and resolve problems before they arise.
Our EV drivers are very positive about the environmental contribution they make and the quiet and easy driving experience, but it was important to get their 'buy-in' early in the EV transition process. Using 'at home' and ‘at work’ charging for EVs can also help to reduce downtime.
Q. Is EV charging proving to be a challenge for Centrica?
A: Most of our drivers currently use home charging, which takes about 12 hours. This works well for those who have home parking and can charge overnight, but for drivers who are 'on-call', or who don't have a specific parking space, it's more difficult. In these instances, we're using Centrica owned and operated charging hubs or aligning with public charging facilities.
Rapid charging is a challenge for the EV industry right now, but capacity and battery range is quickly developing and it's becoming less of an issue. Newer high-performance vehicles are putting 90kW batteries in the car, which cover about 200 miles and can recover another 100 miles on a 20kW 2.5 hour charge.
Centrica is contributing to the long-term fast charging solution. As a leading EV charge-point installer in the UK, we are supporting the rapid delivery of this vital infrastructure. This includes more than 142 charge-points across our own sites. We've set up a specialist Mobility Ventures team to support businesses with all aspects of EV integration.
We've partnered with Ionity to install 350kW charging points at Extra Motorway Services, where next-generation vehicles will be able to charge in less than 20 minutes using 100% renewable energy. Centrica is also working with numerous other partners, including Councils, motor companies such as Ford, Lotus and Volkswagen, and car park operator NCP, to develop innovative generation charging facilities and services.
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Q. What other challenges have you faced and are there any downsides?
A: Since EVs cost more than ICE vehicles, calculating economic viability relies on being able to work out the total lifetime cost. Proving the business case was complex, especially as the EV supply chain is more intricate and the areas of spend tend to sit in different parts of the budget. However, it was worth the effort as we have now proven that the decision stacks up economically, despite the higher purchase or leasing cost. As vehicle prices fall with mass roll-out, the cost returns will improve further.
The growth in low and no emission zones across towns and cities adds to the economic case for EVs but increases complexity. That's because most local authorities aren't aggregating the platforms to access these zones.
Q. What do you see as the future opportunities for fleet electrification?
A: As the market rapidly matures we expect prices to fall across the entire supply chain, especially for vehicles. There will also be greater choice and continual improvements in battery life and range.
Inevitably, EV charging increases an organisation's total power consumption, but there's an excellent opportunity to integrate charging infrastructure with on-site low and zero carbon generation and battery storage assets, which we are doing at our own sites. This increases power availability and avoids any network capacity constraints, improves sustainability, lowers energy costs and increases energy resilience.
There's also an opportunity to earn revenue from power flexibility via lucrative optimisation programmes like demand side response.
We expect that Vehicle-to-Grid initiatives will be widely used in the next 5 years. This will enable fleet operators to charge during off-peak demand periods, then sell any excess stored power when demand is high and financial incentives are most generous. This is a particularly attractive option for back-to-base fleets, where vehicles may be plugged in for longer periods.