Power poverty: the new paradigm for social and economic inequality of electric vehicles

Power poverty: the new paradigm for social and economic inequality of electric vehicles

By Jonathan Riggall, Equity Director, and Scott Witchalls, Partner

 

There is an emerging social and economic inequality in the UK when it comes to the cost of charging an electric vehicle (EV).

The problem

An EV owner with access to a charging point at home can charge their vehicle off their domestic tariff, typically 11p to 14p per unit of energy. So roughly £7 per ‘tank of electricity’ for about 300miles.

An EV owner with no access to a charging point at home will need to find one of the many privately owned commercial charging points which each have individual membership charges, variable unit costs of energy, and no guarantee of availability. Typically, a non-membership charging point would cost between 30p to 40p per unit of energy. That’s about £20 per tank of electricity.

This inequality is currently hidden because current EV owners are either wealthy enough to have off street parking (a driveway) or environmentally minded enough to pay the ‘extra’ cost, which ends up making the cost the same as filling up with petrol or diesel.

There is a mismatch between the UK housing stock and the ultimate need for every EV user to have access to a charging point.

In dense urban areas and particularly the lower income households, it is likely to be impractical and expensive to provide charging facilities. 

A recent study by PBA showed that in just one dense urban area over 80% of streets are used for car parking, with nearly 10,000 street parking permits granted by the local authority.

A future where the majority of cars are electric would stipulate that each of these spaces (10,000 cars in this urban area) could be at the mercy of unregulated commercial charging operators if they don’t have access to domestic electricity supply. 

This then begs the question, of the 10,000 cars, how many of the EVs will be owned by low income households? Not so many yet, but the reality is that lower income households will be picking up lower cost second hand vehicles, and these will eventually all be electric. Over time, this second hand market is likely to be filled will less efficient power-hungry older models, ripe for a future EV scrappage scheme. 

If Low Income High Cost (LIHC) indicators are to be applied, as with fuel poverty, how many of those permit owners would be classed 'power poor'?

The current response

With the drive for EV ownership stimulated by the Government’s Clean Growth Strategy, there are a myriad of initiatives and local strategies emerging. 

Many local authorities are looking in earnest at how they plan for a future with electric cars, several of whom are starting to define their infrastructure requirements. 

This includes requiring new homes and businesses to be fitted with charging points, street lamps to be converted to be able to charge vehicles and public car parks to be retrofitted with commercial charging units.

These strategies are only short-term fixes and certainly do not resolve the cost disparity between home charging and public charging infrastructure. 

In fact, in new developments, local planning policy demanding EV charging points will only exacerbate the divide between those who have and those who have not. 

Such short-term approaches also do not account for some fundamental and obvious problems they create.

Firstly, our urban realm and how we use it will not tolerate EV cables hanging out of every street lamp column, front drive or across public car park. The liabilities of trip hazards, vandalism or theft of the thick copper cabling, are far too real. 

Secondly, our local electricity distribution network was never designed to power all of these electric cars. Much of this distribution network is already close to capacity, as an efficient network should be. Any incremental power uptake from individual commercial charging points within an urban geography may be doing so at the cost of the needs of the wider population. 

All of this short-term investment could actually stymie uptake of electric vehicles as it will swallow up the last remaining power capacity. 

Government impact

Power supply and transport policy have never really joined at the hip because of the presumption that vehicles will get their fuel from widely available oil based sources, the only exception being the partly electric rail network. The private sector has always been responsible for the supply of petrol and diesel to match market demand. 

It’s not surprising the National Strategies for power and electricality retail are not aligned to motorised vehicles. 

As an example, the Domestic Gas and Electricity Tariff Cap Bill is currently moving through Parliament putting a limit on the retail price of domestic energy. Great news for anyone who owns an off street domestic EV charging point as it will guarantee that the cost of filling up your car is capped through OFGEM and regulation.

However, fuel duty on petrol and diesel still delivers approximately 2% of Taxation Revenue to the Exchequer. That’s a large loss of revenue when Government has capped their own ability to retrieve it elsewhere. 

In addition, the Government has also announced £30million into researching the benefit of vehicle to grid charging points. Basically, you could conceivably be able to run your home from your car battery, which is great if you own a large car and have a home connection point.

It is very unlikely any of the £30million will focus on resolving the financial inequality or current market retail complexities of charging EVs to support our most vulnerable citizens. Currently we do not see Government offering £30million to close this growing social gap or perhaps rolling out a Universal Charging Service that keep the country moving. 

Further work

It is entirely obvious to us that significant work need to be done in drawing together the transport and energy sectors.

Identifying the issue of the power poor will be critical in the journey. By setting out the need in the first instance this paves the way for us to explore more solutions from the private sector and hopefully stimulate Government debate. In championing the power poor now, we can stamp out inequality before it happens and importantly inform policy to ensure it doesn’t happen. 

Whilst the Government continues to promote a technology first Industrial Strategy, PBA will continue to research and define a 'needs first' approach. We have built alternative economic models for EV charging infrastructure, appraised the liabilities of EV street furniture and thought through potential fiscal mechanism to ensure tax revenues to keep flowing from the transport sector. 

Through exploring what we need as a society in the first instance we seek to achieve more socially equitable outcomes now and in to the future.

Jonathan Riggall

Jonathan Riggall

Equity Director – Energy and Environment

  • Reading
  • 07917 372806
Scott Witchalls

Scott Witchalls

Partner – Land Development, Infrastructure and Transport

  • Reading
  • 07770 698174