the good things about being an EV owner is knowing that regardless
of where I charge I’m not going to be paying the outlandish prices
fossil fuel car drivers pay to fill up. In addition, being someone
with off-street parking (i.e. a driveway of my own) I can take
advantage of home charging at cheap domestic rates. In fact as I
sit writing this my electricity provider has emailed me to say that
due to high winds expected this evening there will be a surfeit of
power and they will actually pay me to charge my
EV owners with solar panels on their house the prospect of ‘free’
fuel is a regular occurrence and nothing to be remarked
once you leave the comfort of your own home - or you’re one of the
significant minority of the car-driving population who can’t charge
at home - you fall into the realm of public
the moment this is a little like the wild, wild, West. There are
numerous charge point operators out there providing numerous
charging options at numerous charging tariffs. We’ve already
discussed several times on the podcast how companies such as bp
Pulse have 8 different tariffs for a single kWh of electricity
depending on the speed of the charger and the method of
However, regardless of the supplier you use the price
you pay will usually be less than the equivalent fossil fuel price.
The exception to this is if you’re using the Ionity network and you
don’t have a subscription via one of their automative founding
as Ian Johnston from Osprey Charging told us on the podcast
recently - the pricing model for public charging has been kept
artificially low and doesn’t reflect the true cost of
Drivers are demanding more and more high speed chargers
but are complaining when Charge Point Operators (CPOs) charge
higher tariffs to use them. A 150kW High Powered Charger (HPC) can
cost upwards of £50,000 to buy and will need more money spending on
ground works etc. before it can go live. At the prices being levied
by CPOs today the return on that investment is projected over a
long time frame. Once the infrastructure catches up with the volume
of EVs on the market you’re going to end up with a number of CPOs
carrying large amounts of capital expenditure with a relatively
small amount of income to pay that down.
Remember CPOs have to pay for the electricity they
deliver and - despite the fact that I can get paid for using
electricity on my tariff - CPOs don’t get a huge discount on the
average price per kWh available to the public. An average price
might be 12p/kWh to the public. Let’s assume the CPOs get it at
10p/kWh. With CPOs like bp Pulse charging 15p/kWh for 50kW charging
on their Polar Plus subscription model, 5p/kWh income doesn’t go
far when it has to pay for maintenance, wages, a call centre, and
other centralised company overheads before it can go towards paying
down the cost of the install itself.
at 35p/ kWh - the tariff Osprey levies for its charging - the
number of kWhs that need to be dispensed just to cover the cost of
a £50,000 charger alone (after removing the VAT element and the
10p/ kWh electricity cost) is a little shy of 270,000. To put that
into perspective that’s filling a Jaguar iPace from 10% to 80%
state-of-charge 4,500 times. Only after that many charges is the
cost of the unit covered. Nobody has been paid for their work, no
maintenance contracts have been paid, no call centres and customer
support paid for. That's just covering the cost of the unit
anyone who has studied economics will tell you this must change.
Free market forces mean that sooner or later the cost of public
charging will increase. With the huge Capex costs CPOs will need to
bear to service the government’s 2030 new fossil fuel vehicle sale
ban, it will have to change.
how expensive will charging be?
short answer is ‘as expensive as
the market can support’
the moment government initiatives and a growing EV base mean CPOs
are ‘happy’ to keep prices relatively low. The know that they are
building their customer base and encouraging the uptake of EVs.
Many of them are backed by venture capital funding or Big Oil
money. Making a short term profit is not their priority right now.
Pulse recently increased their HPC tariff from 40p/kWh to 42p/kWh -
the second such rise in 15 months.
Charge Place Scotland - which had provided free
charging on all its chargers - recently introduced a tariff for
Ionity - which used to have an £8/8 Euro fixed price
tariff - moved to a high price per kWh tariff last
this is only the tip of the iceberg.
envision a time when it costs as much to charge an EV at a HPC as
it does to fill a similar car with fossil fuel now. £60? £70? £90?
The market will push and the consumers will pay. Once EV ownership
hits a critical level the market will cease to be price elastic in
the same way the fossil fuel market ceased to be price elastic. By
that I mean that everyone will price their charging at or around a
base set tariff. Nobody will radically undercut that price to gain
customers as they know they’ll lose money.
today the price differential between the most expensive litre of
petrol and the cheapest litre is no more than a few pence (ignoring
the higher prices charged for the captive markets at motorway
service stations). When was the last time anyone reduced petrol by
20p a litre lower than a competitor? It doesn’t happen. Any small
price differentials are usually temporary.
same will happen for EV charging.
has been made of the fact that once fossil fuel sales dwindle the
government will lose a substantial proportion of income from fuel
duty. They will need to find ways to recoup that lost income
elsewhere. Many have speculated that home charging through smart
meters will be a target. Road pricing per mile is another option
(and quite a fair one)
targeting Rapid and High Powered Chargers and levying a duty per
kWh is a sure-fire way of bringing in additional income. The beauty
of this is that it doesn’t penalise those users without home
charging as they can use fast chargers (7kW or 22 kW as
appropriate) which won’t have the duty applied, but it does target
those who use high powered charging a lot. Tom Callow from bp Pulse
told me recently on the podcast that they have chargers in Central
London that are used 30 times per day.
Imagine if each of these just adds 10 kWh of charge and
the government levies a 10p/kWh duty. That’s £10,950 per year just
from that single charger. Calculate the duty on ALL rapid and high
powered chargers currently being used in the UK (3867 as at Dec 27
2020) and that can start to add up. Remember, also, that the number
of actual rapid and HPCs in the UK will ramp up dramatically as the
UK prepares for the 2030 ban to kick in. A government which doesn’t
consider this as a potential source of revenue is certainly one
that is missing a trick.
the moment EV charging is still relatively cheap for public
charging. But we need to reconcile ourselves to the fact that this
will ultimately change. Market forces and government duties
will conspire to push the price of charging inexorably upwards in
the same way as it did for fossil fuels.
we’ll accept it in just the same way.