Carlo Stella, partner at Arthur D. Little Middle East, and global sustainability lead and Philipp Seidel, principal at Arthur D. Little, Germany, explain how GCC can adopt EVs efficiently
The world is facing a climate emergency. For centuries, fossil fuels have been the backbone of industry and economic growth, but the emissions they release into the atmosphere have eroded the Earth’s natural defences, placing life in all its forms under threat. Responsible for around a quarter of all greenhouse gas (GHG) emissions, the transport sector has long been part of the problem, but through electrification it can also be an important part of the solution.
The regional dimension
In the GCC, the technologies and political will behind e-mobility are firmly in place. Yet the region faces a hurdle; nations across the Gulf rely heavily on road transportation, and while consumer awareness of sustainability is rising, the preference for SUVs powered by petrol and diesel endures. Countries across the GCC have invested heavily in their public transport systems in recent years, but for as long as people rely on private vehicles, the answer to sustainable travel lies under the hood.
Here, Arthur D. Little’s Global Electric Mobility Readiness Index (GEMRIX) 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.
In the UAE, the Dubai Green Mobility Strategy 2030 aims to introduce approximately 42,000 electric cars 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. For its part, Qatar has already achieved its target of electrifying 25% of its public transit bus fleet and the adoption of EVs is being encouraged through green financing options.
Meanwhile, Saudi Arabia’s modest rank of 23rd on the GEMRIX index belies the significant e-mobility initiatives underway. The kingdom’s Public Investment Fund (PIF) has launched Tasaru Mobility Investments, designed to accelerate the development of Saudi Arabia’s electric vehicle and autonomous mobility ecosystem. Saudi Arabia has also launched its first national electric vehicle brand, Ceer, in partnership with Foxconn, and has entered the world of electric motorsports.
The challenges to e-mobility
The GCC has made important first steps along the journey to e-mobility. However, widespread uptake among local populations hinges on the region’s ability to overcome significant infrastructure hurdles.
Prime among the challenges is charging network density, both in alternating current (AC) power and the faster direct current (DC) power. 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 to be installed across the region. There are also significant implications for the energy grid when it comes to private charging, with a clear need for grid architecture and stability to be reviewed if the potential of e-mobility is to be realised.
On the demand side, vehicle electrification will substantially increase electricity requirements. However, with EVs expected to account for less than 10% of total electricity demand by 2030, the challenge relates mainly to the local impact of charging, with the potential for network overloading risks if large numbers of EV owners charge their cars in the same place, at the same time – a challenge that is particularly acute in residential blocks. To mitigate this risk, utilities must invest in re-enforcing the grid while at the same time taking active demand side management measures to limit the concurrent peak demand.
The business case
Despite the challenges, business cases are emerging that drive home the potential profitability of EV infrastructure investments, with opportunities for a range of stakeholders such as vehicle manufacturers, utility companies, private equity firms, and infrastructure funds.
Historically, there have been three roles in the public EV value chain: charge point operators (CPOs), mobility service providers (MSPs), and e-roaming platforms. Today, it is in the interplay between CPOs and MSPs where the most value lies.
As outlined in ADL Viewpoint, ‘The Evolution of Public EV Charging’, there is scope for charge point operators to grow by adding new locations to their portfolios, acquiring smaller CPOs, offering turnkey solutions to customers, and even expanding into the field of energy services.
Meanwhile, MSPs are diversifying by providing B2B fleet solutions that integrate billing for home, work, and public charging – or by 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.
In addition to the growth potential for CPOs and MSPs, 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. Meanwhile, behind the meter, 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.
Recommendations
As countries across the GCC 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 and net zero pledges, opting out of the race is off the table. With transport counting among the world’s biggest GHG emitters, building sustainability across the sector is vital and e-mobility will be a key driver of change. In the GCC, the journey has begun; sustainability, decarbonization, and ‘green thinking’ permeate national visions at almost every level, and EV innovations are being tried and tested regionwide. From infrastructure to consumer behaviour there are significant challenges ahead, but where there is investment and political will, there is a way.
