As energy costs continue to climb, we’re all keeping a close eye on our smart meters. People across the UK are tightening their belts for a tough winter – and bracing for household bills of up to £4,000 when the government’s energy price freeze evaporates in April 2023.
During a cost-of-living crisis, it’s natural to focus on immediate expenses and short-term savings. The bigger picture often becomes blurred, with global challenges like CO2 emissions and climate change taking a backseat to simply making ends meet. Our collective commitment to decarbonisation is also tested when electric vehicle (EV) owners are feeling the pinch as much as petrol and diesel drivers. Thanks to spiralling wholesale gas and electricity rates, EV motorists who charge via the pay-as-you-go public network have seen a 42% price spike since May 2022. According to RAC Charge Watch, it now costs £9.60 more to rapid charge a family-size EV car to 80% than it did six months ago. The year-on-year increase is £13.59.
Surveys show these price hikes are preventing consumers from making the leap to electric. Despite a ban on the sale of new petrol and diesel cars just eight years away, research from the AA reveals more than 70% of drivers have delayed owning an electric vehicle because of rising energy bills. But in the broader context of climate change – where fossil fuel dependence damages both the planet and our pockets – can we really afford to wait? Fortunately, changes to a fundamentally flawed electricity market are on the horizon.
Help and wholesale change is on the way
Ofgem has recognised the UK’s energy pricing structure is not fit for purpose, with the cost of wholesale gas determining – and driving up – the cost of electricity.
Currently, the market price is based on the rates of the last generator used to meet demand on any given day. This is usually a large natural gas provider with high margins. So even though 40% of the UK’s electricity is provided by lean, renewable sources like wind and solar, it’s fossil fuel-fired plants that have the final say in pricing. In fact, research by University College London (UCL) shows that, ‘despite gas providing under half of the total electricity in the UK, in recent years it set electricity costs 84% of the time’.
In response to soaring household bills and Russian gas supplies being held to ransom, the government is considering cutting ties between the wholesale energy markets. Earlier this year, Ofgem announced a range of potential reforms to reduce our reliance on gas imports and speed the route to cleaner, cheaper energy supplies. These included:
- Strategic planning for the energy system by a new independent Future System Operator at a national level and a potentially similar model at a local level.
- Ground-up changes to the electricity wholesale market, including limiting the price-setting potential of natural gas by splitting the wholesale market and using pricing signals to run the system more efficiently.
Finding savings through smarter charging
There’s no doubt this winter will be challenging, especially for EV drivers who are unexpectedly paying a premium to protect the environment. But conditions will improve – and with an intelligent approach to charging, individuals and businesses can outsmart skyrocketing rates while still reducing their carbon footprint.
Common sense changes like limiting trips and charging at home whenever possible will help users capitalise on the current electricity price freeze. However, technology like the Electric Miles platform can achieve more targeted, long-term savings. The app allows users to accurately track their EV charging costs and understand how to make measurable reductions, for one car or a fleet of thousands.
For drivers, the app keeps EVs reliably charged at the cheapest rate, in line with renewable energy availability and set spending caps. The platform works around each user’s schedule, using AI and machine learning to design off-peak charging routines that help drivers avoid expensive on-demand top-ups.
Companies that leverage smart-charge technology can boost efficiency and control costs with clear snapshots of carbon emissions, pricing and driver data. Cutting-edge software connects wirelessly to vehicles and chargers, shifting EV charging loads from peak to off-peak periods and seamlessly moving users to the lowest tariff at all times.
Businesses and families have been blindsided by increasing energy bills – and fallen victim to an outmoded system that stifles progress in the renewable energy space. But positive change is in the pipeline.
Now is not the time to turn our back on Net Zero, but to embrace tools that make decarbonisation an easy, everyday achievement, lightening the financial load along the way. With patience and the power of technology, we can tackle climate change and the cost-of-living crisis with a single, sustainable step forward.
Want to learn more about cutting EV charging costs and protecting the grid? Reach out to the Electric Miles team.