Drivers across the UK could face higher charging prices as a result of the Government’s decision to end the Energy Bill Relief Scheme (EBRS) in April.
Cornwall Insight has warned that while the EBRS has led to at least two EV charging operators to reduce their prices, including Source London and Osprey Charging, it’s unlikely that those price reductions will last after April.
In fact, the modest cuts by the two firms, with Source London reducing its pricing by 9p/kWh and Osprey Charging having a 21p/kWh price reduction, was directly attributed to the Government’s scheme. The two firms noted that the scheme had enabled the companies to reduce their commodity costs, allowing them to pass on some savings to customers.
However the impact on the EBRS for businesses is not especially impactful for EV charger operators. 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 charge point operators 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. In fact, while both Source London and Osprey Charging have committed to cutting prices, other charge point operators 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.
That means that with the Government set to end its support, drivers who have made the switch to electric could face even more increases going forward. However, charge point operators also know they need to not price out drivers, as without them revenue will drop leading to less cash for other fixed costs. After all, it’s better to make some revenue than none – although taking a loss could cause EV charging operators to slow down their aggressive growth strategies, which could see the UK fall short of the Government’s target to roll out even more EV chargers.
Oliver Archer, Lead Analyst at Cornwall Insight, noted, “The mixed bag of price cuts and price hikes announced by charge point operators (CPOs) since the introduction of the Energy Bills Relief Scheme (EBRS) illustrates the challenge facing these companies. The EBRS lightens the load, but only through the winter, with CPOs facing an uncertain landscape when the scheme ends in April. With the commodity market expected to remain high, acting now to prepare robust risk management strategies will be crucial in charting a course through 2023. If conditions do not improve, we may see some companies struggle to maintain and build their networks, at a time when we want to be accelerating the rollout to support EV drivers”