The Rising Costs of EV Charging.

On 1st April, significant changes to electricity grid costs come into effect, impacting charge point operators across the UK. One of the key changes is an increase in capacity charges – these are fees that directly relate to delivering high-powered EV charging with large grid connections. These rising costs are having a notable impact on the industry, influencing the price EV drivers pay at the charge point.

Capacity charges are fees that businesses pay to ensure they have enough power available to meet their peak demand, essentially reserving space on the electricity grid. For ultra-rapid EV charging, where multiple high-powered chargers operate simultaneously, securing sufficient capacity is essential to delivering fast, reliable charging. These capacity charges help ensure the grid can supply enough electricity as demand increases in the future, but they are now becoming a growing financial burden for public charging networks.

Since April 2023, capacity charges have risen by an average of 77%, with the worst affected regions increasing by up to 168%. This is on top of the large increases we have seen to standing charges in recent years. For a public rapid charging network with around 100 sites, this could mean an increase of over £1 million in annual costs. This additional financial pressure makes it more expensive to operate rapid charging stations, and we have already seen the impact of this on the pricing of many rapid charging networks across the UK.

Many EV drivers compare the cost of charging at home with charging on the public network. However, there are several key reasons why public charging is more expensive than domestic electricity:

Infrastructure and Maintenance Costs

Unlike home charging, public networks require significant investment in grid connections, charging hardware, site construction, and ongoing maintenance. This investment ensures drivers have access to reliable, super-fast charging infrastructure on the go, but it also contributes to the overall cost of using the network.

VAT Differences

Domestic electricity is taxed at 5% VAT, while public EV charging is taxed at 20%. This means drivers using public networks automatically pay four times the tax that home-charging drivers do.

Energy Price Protection

The price charging networks pay for electricity isn’t just the wholesale cost of energy. It also includes supplier costs, government taxes and levies, and transmission fees. Unlike home electricity prices, which are protected by the Government’s Energy Price Cap, commercial energy prices are exposed to wholesale market volatility and reflect the full cost of delivering power. This includes transmission fees, energy supplier costs, government levies and other regulatory fees that all contribute to the final price of electricity for charge point operators. It is worth noting that while costs have decreased over the past year or so, the wholesale price of energy is still double what it was before summer 2021.

At Osprey, we are designing our network for the long-term needs of EV drivers. We invest in large grid connections at our sites to ensure that, even as demand grows, drivers can always rely on our chargers to deliver the power they need.

By future-proofing our network and continuing to provide a high-quality, reliable service, Osprey is committed to leading the transition to electric vehicles. While rising costs across the industry are a challenge, we remain focused on delivering convenient, accessible, and transparently priced charging for all drivers.