We all pay for EV charging
Even if you don’t drive, you are likely to foot part of the bill for electric vehicles (EVs). This isn’t just because your tax is funding subsidies to the industry. Our electricity systems are designed this way. And it could get more expensive.
Electric utilities in the UK are privatised. National Grid is too, the company that is responsible for making sure the grid is “balanced”. They ensure that whoever wants electricity receives it from whoever is able to sell it, at any given time.
Whenever these companies invest in their infrastructure, they are legally entitled to profits each year based on a percentage of the capital value of those upgrades. These ‘allowed profits’ are also indexed to inflation, reliably increasing electricity bills each year. Since these costs are for the whole grid to function, they are allocated to each kilowatt-hour (kWh) that a household consumes, as well as to their daily fixed charge.
EVs can be charged in the home as well as at public charging sites like carparks or petrol stations. Either way, car owners pay per kWh of charge. To charge quickly, however, a higher powered connection is required, and this costs money and takes time to install.
The utilities are already severely backlogged for renewable project connections, in some cases up to 10 years. In July 2022, West London housing developments were told their grid connections would be delayed until the 2030s, in part because data centre developers were further up in the queue. The City of London had to intervene to prioritise these connections in the next 1-2 years in line with development timing.
These connection upgrades seem like they will only get more intense, even though the numbers seem small at first. Each vehicle demands ~5-6 kWh of energy per day [i], if used to drive ~20 miles, the average British daily mileage. This can be achieved through slow charging overnight with a minimum of 2.4 hours using a standard wall plug of 2.3kW, or faster if upgrading to a 3.6kW or 7kW plug. If running at full power, this would be a large portion of the current household’s power demand and maximum capacity for circuit breakers.
Older UK homes have 30-60 Amp / 7-14 kW connections, with upgrades possible to 100 Amps / 23 kW grid connection. If electric cars charged over an 8-hour period at night based on their daily usage, this would add ~0.7kW to the household’s night time load, or 5-10% of existing connection capacity without an upgrade. Someone who drives more or requires faster charging would see their load increase by more.
There is still some slack in the system now, when so few people own EVs. 1 in every 36 vehicles is a zero emissions vehicle, and 22% of households do not have a car at all. But once more people switch to electric, the power demands to charge these cars could increase dramatically, even on slow-charging mode. Not only would the houses need a connection upgrade, but the powerlines themselves may eventually need more capacity.
Given the technical upheaval to make grid upgrades a reality, the utilities are already making plans and estimating their capex requirements. The problem is that the cost of these upgrades is socialised, meaning that everyone who uses the infrastructure pays. Not everyone can afford to drive an EV, let alone drive at all, yet every household pays for the capital invested by the utility to upgrade all these connections.
Although subsidies for car purchases or public EV charging stations are often in the news, these socialised costs are rarely discussed. Other technologies, like hydrogen-powered vehicles, would reduce socialised costs, but are not garnering nearly as much government support due to their current high cost and capital requirements.
It may also be cheaper if EV owners installed home batteries to avoid a grid upgrade, and created an additional flexible power source. Or, businesses could pay for grid upgrade costs at offices, allowing people to charge their cars at their destination and reducing the need for home charging and residential connection upgrades.
Another way to repay the implicit subsidy is through sharing the revenue of products that allow EV owners to feed their battery capacity back into the grid when needed. Octopus’ Flexible Power product trial has been a massive success for balancing the grid, able to control the charge of EVs on demand to create a virtual power plant. The car owners capture a portion of the upside, but National Grid does pass on cost savings to all customers on the grid.
There are many options for how we fund grid infrastructure upgrades. As EVs become more common, we should make sure these costs are fairly distributed.
[i] Based on 270 Wh per mile, sampled from https://octopusev.com/cars