Government action on high energy costs is needed to keep the UK’s EV transition on track, a new study claims.

The report by ChargeUK, the association for charging firms, shows the charging sector’s energy bills have increased by up to 79% since 2021 and standing charges have gone up by 462%.

The Delivering Affordable Charging for All white paper sets out how this has impacted the prices that drivers pay and also reveals three deliverable steps that the Government can take to support cost-effective charging.

A quarter of all new car sales are now EVs and the UK public charging network hit over 85,000 charge points this month, but affordable charging is key to more drivers switching.

Vicky Read, chief executive of ChargeUK, warned: “If the Government wishes to ensure that cost of charging does not become a barrier to millions more drivers switching to EVs, it needs to take action – to tackle sky-high energy costs, to address the VAT penalty and to introduce EV charging to its existing renewable fuel credit scheme.”

She added: “Most drivers can already charge affordably, and the charging sector is innovating to offer additional ways to access cost-effective options. But the public charging sector has been hit by a series of policy and regulatory decisions that have caused our own costs to soar, with an unavoidable impact on some driver prices.”

The charging sector is playing a vital role in supporting the UK’s EV drivers, investing £6bn to grow the public network by around 30% a year. Most drivers can already charge cost-effectively using a blend of home and public charge points. However public charging prices having risen by 38% on average since 2021, impacting those who cannot easily access home charging.

ChargeUK’s new white paper draws on independent analysis by Cornwall Insight to show that a sharp increase in operators’ underlying energy costs – both wholesale energy and fixed charges – is the main cause of average price increases.

The report sets out a three-point plan for policymakers to enable all drivers to charge affordably:

1. Tackle operators’ prohibitively high energy costs. This includes work to accelerate existing regulatory reforms to bring down the high cost of standing charges, and to extend policy levy exemptions to the charging sector, as for other strategic sectors, ahead of planned increases.
2. Boost the charging business case. Adding EV charging to the existing Renewable Transport Fuel Obligation scheme would cost the Government nothing while generating operator revenues that would support deployment and help keep consumer prices competitive, according to ChargeUK.
3. Eliminate the VAT penalty on public charging. Bringing VAT on public charging down to 5%, in line with home charging, would address the current disparity, which costs drivers who cannot charge at home an additional £145 a year,

ChargeUK’s Vicky Read added: “Our members are committed to ensuring that all drivers can charge affordably across the mix of charging options available to them. So today we are setting out three deliverable actions for government, which address or compensate for high and rising costs that are outside our control.

“The Government has already recognised that affordability is key to this EV transition, and has taken action, launching the Electric Car Grant. We now need ministers to focus on addressing the business costs impacting affordability of charging, so that we create the best possible conditions for drivers to make the switch.

Jacob Briggs, senior consultant at Cornwall Insight said: “High energy prices, rising network charges and the higher rate of VAT on public charging compared with plugging in at home ultimately means that drivers are paying the price. Unless these cost pressures are tackled by Government, we risk turning a good news story into a barrier for millions of drivers who want to go electric.”

EVA England, a member association championing EV drivers, welcomed the findings.

Vicky Edmonds, chief executive, said: “With three out of four drivers believing that high public charging costs are a key barrier preventing more people from switching to electric, understanding what drives these costs is essential.

“It is clear that EV charging has not been central enough to decisions around electricity market policy and regulation. If we are to make public charging more affordable, it must be a focus for future decision-making.”

The full ChargeUK paper can be found here.