Recently appointed Managing Director of Mer UK, Statkraft’s EV charging business, Karl Anders is on a mission to scale-up Mer operations and build first class, sustainable EV charging for the UK market. This isn’t challenge-free by any means, and in this article, Karl explores the tricky subject of the rising costs of EV charging.
What do you do when the base cost of what you supply doubles or even triples over the course of a year? That’s the challenge facing EV charging companies right across Europe, and it is causing concern among the industry and EV drivers alike.
It’s no secret that electricity prices have shot up recently. We are all feeling it in our energy bills. The recent volatility in electricity prices is a result of a number of factors; both geopolitical and economic, and inevitably this impacts the price EV drivers pay at the charging points. The causes of the energy supply turmoil have been in the headlines for months, but it’s worth looking at the specifics of why EV charging prices are rising.
Here in the UK, as we try to get rid of our dependence on coal-fired electricity, we are increasingly exposed to the vagaries of gas supply and pricing. Gas is an important part of the transition process away from coal and towards renewable sources for electricity generation. Disruption to gas supply caused by Russia’s invasion of Ukraine is strongly impacting gas prices and the cost of electricity. The way energy markets work is that if the gas base price goes up, the renewable energy source base price goes up too. The markets don’t distinguish between sources. This pushes up the base costs of EV charging for companies like Mer and others. Over the past year, our base cost has pretty much doubled or even tripled. The amount we are paying out for electricity has gone up substantially – and it’s this rise that EV drivers are seeing at the charge points.
The government steps in
One thing that has changed recently is the government’s non-domestic price cap. Similar to the price cap announced for consumers, the Energy Bill Relief Scheme provides a discount on wholesale electricity costs for all non-domestic customers until March next year. This does mean that, although we all will have to increase our prices, it is not by nearly as much as it would have been without the cap. One supplier attracted negative headlines by increasing its price ahead of the announcement, but for many of us it was a waiting game in a very fast changing situation to properly understand the market before responding.
While the government’s scheme is very welcome, it can’t provide all of the answers – and who knows what the situation will be next March when the scheme closes.
Keeping the cost of running an EV as low as possible is absolutely crucial for EV uptake. That applies equally to home charging and public charging, so the price cap has relieved the pressure to some extent. We are constantly looking at our pricing in order to provide comparatively low-cost charging to our customers. Mer has recently updated its pricing but limited the potential increase, so it remains on par with other charge point providers at 69p per kWh for registered users using our rapid chargers and 55p for registered users on our fast-charging network.
When EV charging prices rise rapidly, it does cause consternation – especially among sceptics who compare the costs with running a petrol or diesel vehicle. One headline in the past couple of weeks stated that the cost of running an EV was on a par with petrol or diesel. This came down to a single charging company revealing its price rise ahead of the relief scheme announcement. To be fair, it could have been any company.
The markets are changing so rapidly, and we all have to make pricing decisions based on what the markets are doing so it’s impossible to be 100 per cent certain. But in general, the price of electricity at the charge point is a lot more stable than petrol or diesel at the pumps. Over the summer we saw those prices fluctuate almost daily, rising and falling by as much as 40p a litre. What’s more, over time, the price of EV charging will become more stable as more infrastructure is rolled out and more of us transition to EVs over the next five to ten years. When that happens, the price of petrol and diesel could be a lot higher as demand drops and the number of petrol filling stations diminishes. Ultimately, drivers will have to drive further to find one.
Cost is only part of the equation
It’s about much more than fuel price, however. The comparison between EV and ICE (Internal Combustion Engine) vehicles is completely understandable – we’ve been driving cars for over a century and the way we drive, fuel and look after our vehicles is ingrained. What you are seeing with EVs is something of a paradigm shift, a bit like the move to motorised vehicles from horse-drawn ones. We have to think differently in order to act differently. When you’re driving along the motorway, you might be thinking about the number of miles to the next services and planning your journey to squeeze every last drop out of the tank. And why not? After all, you don’t want to make too many stops at a petrol station, they’re hardly pleasant destinations after all. In an electric vehicle, you start to think differently.
I recently took part in the Great British EV Rally travelling 1,500 miles in five days from John O’Groats to Land’s End through some really rural areas. When we needed to recharge for 20 to 30 minutes every few hours we focused on other things, like having a coffee or taking a comfort break. We often amusingly measured our journey in terms of ‘comfort stops’ because we realised that in terms of range, the Audi we were in could go a lot further than we could.
While no one wants to see prices increase, especially during the current cost of living crisis, it is inevitable that the prices you see at the charging points will change over the coming weeks. At Mer, we are committed to keeping the rise as low as we possibly can while continuing to remain healthy and in business to maintain and update a strong network of chargers that our customers rely on.
How much does electric vehicle charging with Mer cost?
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