Charge point operators facing uncertain future when government support scheme ends in April

The energy crisis has pushed up the price of charging electric vehicles (EVs) on the public network, leaving both rapid and ultra-rapid charging, on average, significantly more expensive than refilling a petrol or diesel car. The government’s Energy Bill Relief Scheme (EBRS) has brought a six-month reprieve to business customers, however since the scheme was announced in September, only two charge point operators (CPOs) have announced price cuts, while five have put through increases.  

Unlike the domestic Energy Price Guarantee, the EBRS does not guarantee businesses a fixed unit rate for delivered electricity, and instead provides a discount to the wholesale element of the bill. For companies not on fixed contracts, this will be up to a maximum reduction of £345/MWh, or 34.5p/kWh. Energy input prices for CPOs will depend on type and length of supply contracts, and they will also have other costs to recover from drivers, including asset costs, rent and operational costs. The two CPOs that have put through reductions following on from the EBRS, Source London and Osprey Charging, have cut their pricing by 9p/kWh and 21p/kWh, respectively. Both were clear that the EBRS helped reduce some commodity costs but was limited in its impacts. Other CPOs have said that despite passing on 100% of the EBRS reductions to customers, they were still having to put charging prices up to account for increasing wholesale costs.

While some CPOs may still be working through the finer detail of the EBRS with their suppliers, the price movements we have seen since its launch demonstrate the difficult position these companies are in. The commodity costs seen by CPOs have increased substantially over the last few years, with energy prices now dwarfing all other elements of the charging cost stack (Figure 1). Companies that have been on out of contract rates will be particularly exposed to these changes. CPOs are also wrestling with an additional conundrum when they make pricing decisions based on these inputs: revenue comes from utilisation of their networks, and pricing needs to support increased utilisation, both at a particular network and in a broader sense through supporting the transition to EVs. Many have been taking the decision to absorb as far as possible higher commodity costs, but this is not a long-term solution.

Any price reductions from the EBRS will be welcomed by drivers and CPOs, but they will likely not be substantial or last beyond April 2023. CPOs grappling with what the scheme means for their pricing strategies will also want to act now to understand what contracts will be available to them after the scheme ends in April, and what risk management strategies they can employ. 

Figure 1: Illustrative public charge cost stack, 2019 vs 2022