RESEARCH PROJECT COBBLESTONE

Prathmesh Sidana

www.prathmeshsidana0005@gmail.com
 a) Effect on Electricity Demand
Assuming a moderate growth rate in EV adoption, with approximately 35% of
all vehicles being electric by 2030, the additional electricity demand could be
estimated at 8-10 GW during peak charging times. Furthermore, considering the
anticipated shift in charging behavior to off-peak hours due to smart charging
initiatives, the effect on daily electricity demand may be less pronounced.
Overall, the electrification of transport could lead to an increase in the average
daily electricity demand by approximately 15-20% by 2030.
This is the expected growth in electricity demand according to CCC.

Figure 1

Figure 2

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 b) Impact On Electricity Prices
The electrification of transport, particularly the widespread adoption of
electric vehicles (EVs), will lead to a surge in demand for electricity. This is
expected to put upward pressure on electricity prices, particularly during peak
hours when people are charging their vehicles. This could be exacerbated by
factors such as:
Limited grid capacity: The UK's electricity grid may not be able to handle the
sudden increase in demand from EVs. This could lead to congestion and
blackouts, which would further drive-up prices.
High cost of EV charging infrastructure: The cost of installing and
maintaining EV charging infrastructure is still relatively high. This could make it
more expensive to charge EVs, which could further increase demand and prices.

c) Impact on Volatility over Time

It is expected that the market will be highly volatile due to lack of
infrastructure at initial stages as there would be less supply based on demands.
However, it will get stabilized gradually over time, although short-term intraday
price fluctuations may persist.
Overall, it is difficult to say whether electrification would increase or decrease
volatility over time. The impact would likely depend on a number of factors,
including the specific mix of energy sources in the grid and the efficiency of the
new transportation systems. These will be the drivers in the price of electricity.

d) Impact on Intraday Price Volatility

A switch to electricity-based transport could increase intraday price volatility.
This is because EVs typically operate during peak demand periods, so the
increased demand for electricity could put upward pressure on prices during
these times.

e) Impact on Cobblestone's Trading Business

A switch to electricity-based transport could have a significant impact on
Cobblestone's business. On the one hand, the increased demand for electricity
could create more trading opportunities for Cobblestone. This is because there
would be more price fluctuations, which traders could exploit to make profits.
The increased volatility in the market could also make it more difficult for
Cobblestone to manage risk. This is because prices could move more quickly and
unexpectedly, which could lead to losses if Cobblestone's trading positions are
not properly hedged.
Overall, the impact of electricity-based transport on Cobblestone's trading
business would likely be mixed. There would be both opportunities and risks
associated with the change. Cobblestone would need to carefully assess the
situation and develop strategies to manage the increased volatility in the market.
Predictions can be made using data from government policies, battery
technologies and expected supplies which will play vital role in determining trade
positions as Market will be highly volatile due changes in policies and high
demands at initial stages due to lack of infrastructure at initial stages of this
transition. Also, seasonal vacation demand for electricity would be high as people
will travel more during those times.

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 Figure 3 Expected Demand of UK in 2050

a) Effects On Electricity Demand

Shifting from gas boilers to electric heating systems in residential buildings
would considerably impact the nation's electricity demand as shown in fig.1,2 and
3. It can be observed that there will be high demand as compared to today’s time.

Figure 4 Electricity Demand Comparison

a) Impact on Electricity Prices

A switch to electricity-based residential heating would likely lead to an
increase in electricity prices. This is because electricity is generally more
expensive than natural gas, which is currently the most common source of
residential heating in many countries. The increase in demand for electricity

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would also put upward pressure on prices. However, the extent of the price
increase can be found out through detailed analysis of data.

b) Impact on Volatility over Time

The impact of electricity-based residential heating on volatility over time is
more uncertain. On the one hand, the increased demand for electricity could
make the market more volatile, as prices would be more sensitive to changes in
supply and demand. On the other hand, the growth of renewable energy sources
could help to reduce volatility, as these sources are more predictable than fossil
fuel-fired power plants.
The impact would likely depend on a number of factors, including the specific
mix of energy sources in the grid and the efficiency of the new heating systems.

c) Impact on Intraday Price Volatility

A switch to electricity-based residential heating could increase intraday price
volatility. This is because heating systems typically operate during peak demand
periods, so the increased demand for electricity could put upward pressure on
prices during these times. Intraday market will show drastic changes throughout
the year due to temperature and atmosphere changes as demand of electricity
will depend on climate.
f) Impact on Cobblestone's Trading Business
A switch to electricity-based residential heating could have a significant impact
on Cobblestone's business.
The increased volatility in the market could also make it more difficult for
Cobblestone to manage risk. Market may be volatile at initial phases of transition
from gas oil to electrical technology hence there will be high risk for traders to
invest but also it will create more trading opportunities for Cobblestone to
analyze market behavior and sentiments to make large profits.
Predictions can be made using data from government policies, climate changes
and expected supplies which will play vital role in determining trade positions as
Market will be highly volatile due changes in policies and high demands at initial
stages due to lack of infrastructure at initial stages of this transition.

Sources:
1. National Grid Electricity System Operator
2. Reports from the Department for Transport and the Department for
Business, Energy & Industrial Strategy
3. Industry reports and analyses from reputable energy research
organizations.
4. Reports from the UK Committee on Climate Change (CCC) and the Energy
Systems Catapult (ESC) emphasize the potential increase in electricity
demand resulting from the transition to electric heating.
Assumptions:
1. Here both the cases of transport electrification and household
electrification are studied separately but real scenario may be different
due to correlation between both the factors.

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