EV campaign group FairCharge and motoring group the RAC are calling for a decoupling in the wholesale price of electricity from gas to reduce the cost of EV charging.
The two bodies made the move as the current high wholesale electricity price continues to be set by the global wholesale price of gas, which has reached recorded highs. They believe as a result that the pricing has impacted public enthusiasm for EVs – due to high charging costs.
As a result, they are calling on government to publish the results of its review of Electricity Market Arrangements. The review states that under the current system, gas prices often end up setting the wholesale electricity price – because gas-fired power stations are the last source of supply used to meet demand.
But if decoupling went ahead, the growing share of electricity generated from cheaper renewable sources will over time determine the price “more often”, they said. This situation would bring down energy costs for businesses, consumers and EV drivers as well as encouraging more people to switch to EVs.
FairCharge is also campaigning to get the 20% VAT charged at public charge points reduced to match the 5% levied on domestic electricity. FairCharge and the RAC believe this is an unnecessary barrier to switching to an electric car for the estimated third of people who aren’t able to charge an EV at home – as they have no choice but to rely on the public charging network.
Dr Euan McTurk, advisor to FairCharge and consultant battery electrochemist from Plug Life Consulting, said: “It would make far more sense for wholesale electricity prices – which ultimately dictate what consumers and businesses pay – to reflect where most of the energy is being generated on any particular day.
“Gas power plants would still be paid what they need to keep operating, but wholesale electricity prices would plummet instantly by several tens of pence per kWh, cutting home and commercial energy bills – as well as public EV charging costs. This could all be done very easily at no expense to taxpayers.”
FairCharge founder Quentin Willson said: “EVs charged at home are still considerably cheaper to run than combustion cars, but prices at many public charge points have increased significantly. Anyone using the public network will now have to pay more, but critically, the rise in costs will reduce EV take-up at a crucial time.
“Decoupling the wholesale price of gas from electricity from cheaper renewable sources would help everyone by lowering electricity prices. Those lower energy costs will also impact inflation and interest rates. Decoupling should become an essential and urgent part of the UK’s future energy strategy.”
RAC EV spokesperson Simon Williams, said: “The fact electricity has gone up in price quite dramatically due in the most part to the wholesale price of gas shooting up as a result of the war in Ukraine is a sign that action needs to be taken to change this for the benefit of households and businesses, and to guarantee the electric car revolution stays on track.”
Greg Jackson, founder and CEO at Octopus Energy Group, said: “Renewables are the lowest cost form of energy generation, and electricity is the most efficient way to power transport and heating. We need prices to reflect this, and Octopus would like to see markets reformed to let customers see the benefits of cheap, green electricity.”