The Reality of Charging an EV: Understanding the True Costs

Take-up of electric vehicles has been a rare success story for the UK government’s vision of achieving a net zero economy by 2030. The government reports that in 2022, one in six new vehicles sold in UK was a plug-in electric vehicle (EV). But dreams of an exhaust-free utopia have suffered a recent reality check.

In a highly publicised incident amid the general pre-Christmas travel chaos, electric vehicle owners topping up their EV batteries at Tebay services and elsewhere faced queues of over two hours to use public charge points. 

Recent reports also suggest that the vaunted cost savings of EVs relative to petrol cars may be vanishing due to the increase in electricity prices since the 2022 Russian invasion of Ukraine. 

Are these real setbacks to the EV revolution? How is the UK’s rollout of EV charging infrastructure really going? And might it actually be cheaper to drive a petrol car than an EV?

Charging costs

Recent reporting has made much of the increased cost of charging electric cars during the current energy pricing crisis. From the tone of the reporting, you would be forgiven for thinking that consumers switching from a petrol car to an electric car might even end up with higher fuel costs. This is wide of the mark. 

This reporting has emerged off the back of analysis conducted by the Automobile Association (AA) into the cost of charging an EV at public charge points. The AA report does show that charging during peak times at slow-charging public charge points can end up more expensive than a tank of petrol, by around 1.5p per mile.

However, this is calculated based on 1 kWh costing 73p, substantially higher than typical public charging costs and more than double the current electricity unit price cap cost of 34p/kWh which most consumers will incur when charging at home. 

Indeed, when comparing the cost of EV home charging vs petrol, a 1.2l petrol Vauxhall Corsa is nearly twice as expensive to run as an Corsa-e. Petrol cars with less efficient engines will prove even more expensive.

That said, with the government’s energy price guarantee set to increase by 20 percent from April, costs are undoubtedly rising for EV drivers. Fortunately, help is on the horizon in the form of smart charging – and some EV drivers may already be able to benefit from the reduced athome charging costs it can bring.

Smart charging

2021 regulations ensure that all domestic EV charge points installed since last summer will have smart functionality (though the legislation does not cover ultra-rapid chargers over 50kWh). For EV drivers, the key aspect of smart functionality is its potential to reduce charging costs. 

Smart charging allows drivers to delay power demand from their EVs to off-peak periods, with charging happening at night or at other low-demand points in the day. Under specific ‘time-of-use’ tariffs, charging during off-peak periods can reduce costs significantly. 

All the EV driver needs do is set the time by which they will need the car, and the smart charger makes sure that the battery is charged using the cheapest energy possible. Some EV drivers are already benefitting from this. Octopus’s ‘Intelligent Octopus’ tariff, for example, allows overnight charging from as low as 10p per kWh. 

The government estimates that a commuter driving 18,400 miles a year and charging every weekday could save up to £1,000 by switching to smart charging tariffs. Support by government and Ofgem means these tariffs are likely to become much more widely available, though recent increases in wholesale gas prices have limited their expansion over the last twelve months. 

Bi-directional smart charging

Smart charging is not the only potential financial advantage coming to EV owners in the near future. ‘Bi-directional smart charging’ technologies enable the batteries in electric vehicles to return stored energy to the grid (‘vehicle-to-grid’ or ‘V2G’ energy). This could potentially allow EV owners to charge their EV’s battery at off-peak rates and sell energy back to the grid at peak rates. 

Pilot schemes are already underway, including the government-funded Project Sciurus, in which V2G charge points were installed at the homes of 320 Nissan Leaf owners. The owners, who were on a special OVO Energy tariff, saved an average of £420 on their annual electricity bills. The scheme was also estimated to have saved 30 tonnes of carbon by storing energy generated at lower-carbon times and re-exporting it to the grid at peak times.

Government policy support

The government is still in the early stages of implementing bi-directional charging across the country, and challenges remain. The connection process at charge points is less straightforward than for uni-directional charging, not all vehicles are compatible, and there are some unresolved concerns about the effect of bi-directional charging on battery longevity. Full roll-out of bi-directional charging is not expected until at least 2026.

However, the benefits for EV owners of smart charging and bi-directional charging are clear – and so are the benefits to UK energy supply more broadly. The government and Ofgem’s Electric Vehicle Smart Charging Action Plan, published in January of this year, envisions that the ‘demand-side response’ capacities of domestic battery storage could reduce grid peak demand by 15GW by 2050, representing a saving of up to £50bn on the cost of wider infrastructure upgrades. 

For this reason, a range of other policy responses are being formulated under a new Smart Systems and Flexibility Plan and Energy Digitalisation Strategy. The framework includes measures to make energy markets more responsive to demand, and a renewed focus on smart meter installations. 

In more good news for EV drivers, these measures, combined with an increase in smart charge points at public long-stay parking, could allow operators to offer low charging prices at short notice to EV drivers. 

However, further progress faces one significant hurdle: the slower-than-expected rollout of public charging infrastructure. 

Charging infrastructure

According to a recent government policy paper, the roll-out of public EV charge points is not currently fast enough to meet predicted 2030 requirements. This is particularly troublesome since public charge point availability in itself drives demand, on which basis the new installations should actually be ahead of the curve in order to meet predicted requirements.

Additionally, the geographical distribution of public charge points is uneven, with more than 30 percent of all public charge points currently located in London. Achieving ‘sufficient’ public charge point installations is no use if they are not in the right places. This requires geospatial demand modelling analysis which has not yet been completed at a country-wide level.

But some progress is being made at a local level. Both Oxfordshire County Council and Transport for the North are in the process of building state-of-the-art special modelling programmes to ensure public charge points are distributed in line with demand. Government, meanwhile, is examining how to widen access to demand modelling for public EV charging, which could include the creation of a centralised geospatial dataset for off-street parking and big data analytics to analyse stops on long journeys.

Conclusions

Many of the measures outlined here are still some way off. However, in the shorter term it is clear that not only do EV drivers already benefit from lower ongoing fuel costs, but that smart charging is available to many and offers significant savings. Looking further into the future, the range of measures in the government’s policy pipeline mean that EV charging should only become cheaper, greener and easier.  

Disclaimer

This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2024.

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