Cost of EV public charging under review

The Government is investigating the gap between home and public charging as it pushes to develop a supportive environment for drivers of electric cars and vans

The Government is reviewing the cost of public electric vehicle charging in moves that could have significant consequences for investors and charge point operators.

The electricity tariffs for public charging can be more than 10 times more expensive than home charging. This chasm in costs has raised fears that drivers who do not have off-street parking where they can install a wallbox will delay or avoid the transition to electric cars and vans. As many as 40% of the population do not have off-street parking at home.

“If there is a differential between the costs of home charging versus public charging, how does that play out in terms of people’s propensity to make the switch?” asked Heidi Alexander, Secretary of State for Transport.

The BVRLA’s recent Road to Zero report calculated that home charging equates to a pump price of approximately 79 pence per litre for petrol (at the domestic price cap), and as low as 25 pence per litre with the cheapest off-peak tariffs.

Five energy firms offer off-peak tariffs at prices lower than 9p per kWh, yet the average pay-as-you-go (PAYG) price for public slow/fast chargers is approximately 54p/kWh, and rapid/ultra-rapid chargers averaged around 79p/kWh.

The lack of access to easy home charging is the single biggest barrier to EV adoption, with significant pent-up demand from drivers who would like to go electric but find it’s too inconvenient or ‘faffy’ to find and use a charge point they consider to be affordable, said Vicky Edmonds, CEO, EVA England.

“These drivers are used to just rocking up to a petrol station and being gone in a few minutes. You have to be really enthusiastic at the moment if you want to drive electric and you don’t have a driveway,” she said at the BVRLA’s Fleets in charge conference.

“The Government often says the majority of charging will be done at home, but 40% of households without access to off-street parking is not a minority, it’s a massive chunk of the population, and we have to make it work for these drivers.”

Matthew Waller, general manager of The Charge Scheme, described the current charging situation as a ‘two-tier system’, where the transition to battery power works for drivers who have a driveway and can charge at home, but “if you don’t have access to that, it’s very hard to make it work.”

However, it is unrealistic to expect the cost of home charging and public charging to be equal, due to the different economics involved, he said. Refuelling with petrol or diesel on a motorway costs much more than at a supermarket. Nonetheless, public charging needs to see some of the variety of tariffs that home charging enjoys, with lower prices for off-peak periods and when there is an excess of renewable power.

Tesla is one of the few charge point operators to introduce peak and off-peak tariffs at its public charging stations.

“I’d like to see more of that across the public space, when there are cheap energy tariffs out there for CPOs and for businesses to offer really creative rates. I’d love to see more of that innovation in the industry,” said Waller.

The VAT levied on public charging at 20%, but only 5% on domestic electricity has become symbolic of the gulf in costs between the two charging spaces, but equalising VAT would make very little difference to EV drivers, said Edmonds.

“It’s a very small proportion of the cost stack,” she said. “Energy prices are high, but there has to be a fundamental look at how that cost stack is working and how we bring some of the really big costs for charge point operators down. There’s a big role for Ofgem and Government there.”

Two key enablers to support EV drivers without home charging opportunities would be cross-pavement charging, which is starting to work well, but requires the support of local authorities, as well as on-street chargers and local charging hubs, said Melanie Shufflebotham, COO of Zapmap.

Local public charging, whether on street or in a convenient hub, could deliver prices not much above the domestic electricity price cap, she said.

“So, charging, for example, is 39 pence [per kWh] overnight versus the price cap, which is now around 28 pence,” she said. “And then there are other solutions like charger sharing and dynamic pricing, which actually can bring public rates down closer to that home energy rate.”

While the affordability of public charging is key to the adoption of electric vehicles, so is the rapid roll out of more public chargers to support the growing battery-powered fleet nationwide. Consequently, “investability” is a key component of a successful switch to vehicle electrification, given that private sector money is financing the majority of charging stations, said Thomas McLennan, director of policy and public affairs at the BVRLA.

“It’s definitely not a straightforward fix,” he said.

New technology may hold the answer for investors to continue supporting the UK’s public charging infrastructure while EV drivers gain access to cheaper public charging, suggested Neil Sharpe, chief growth officer, Pod.

“You’ve got very set financing models, particularly on the public side, with private capital at risk. I think we’ll start to see much more innovation around kind of battery storage, enabling different tariffs,” he said.