What impact does gas prices have on charging an electric car?
This is a very topical subject, based on all the gas and electricity suppliers hugely increasing their tariffs.
The massive increase in gas prices is due to European gas stocks being depleted, due to a very chilly last winter, and a cooler than expected spring.
Throw into the mix lower than expected European gas production due to the pandemic, reduced pipeline imports from Russia and increased demand after the pandemic. You have a perfect storm.
Admittedly, I was a bit baffled why electricity prices are increasing steeply, until I researched why.
Something I didn’t know, is that we are still heavily reliant on fossil gas to produce electricity. And increased gas prices (due to shortages) is resulting in a huge increase in electricity prices too.
In the main, this is down to gas fueled power stations, paying excessively for gas, which is hugely inflating their cost of producing electricity.
The governments Department of Business, Energy, and Industrial Strategy (BEIS) forecasted that the cost of producing electricity from gas should have been £34/MWh in 2022. But this is already running at £105/MWh, which represents a hike of £71/MWh.
In the same round of projections, BEIS forecast electricity prices would be £58.5/MWh in 2022. But due to the surge in UK electricity prices are now forecasted at £150/MWh, an increase of £91/MWh.
Using the BEIS forecast power price of £58.5/MWh, the total cost of electricity in 2022 would have been £18.5 billion. However, based on the current price of £150/MWh, the total cost of electricity will be £47.5 billion. This equates to an additional £29 billion compared to the BEIS projections.
Consequently, the rise in gas costs accounts for 80% of the electricity price increase of £91/MWh.
How does that relate to us on the street…
A good friend of mine who owns an electric vehicle gets their electricity through Outfox the Market, and for the past year they’ve been on a variable rate of circa 15p kWh.
Their electric car has a 60kWh battery and a range of 300-miles, with a full home charge costing £9 or 3p mile, against a cost of 15p a mile in their previous petrol vehicle.
But Outfox the Market has increased its variable rate from this November by a massive 53% to circa 23p kWh, increasing our friends monthly bill from £300 to £450, which is a huge increase.
But how has that impacted that cost of charging their electric vehicle?
Obviously, it’s increased. Resulting in a full charge cost of £13.77 or 4.59p a mile. Which is still a massive 70% saving against their previous petrol vehicle cost of 15p a mile.
In conclusion – even though energy prices are currently through the roof (and they will reduce over time) charging an electric vehicle with a home charge point is the cheapest way to drive.
Phasing out fossil gas from the UK electricity grid is the most significant way to bring these power sector costs down.
A recent Ember analysis found that electricity from new wind and solar is already significantly cheaper than existing gas generation in the UK.
Therefore, the government’s commitment to a 2035 gas phase-out also needs the build out of clean power, including investment in energy storage and further deployment of offshore wind.
The governments £350 home charge point installation grant is ending in March, so If you’ve an electric car or one on order, make sure you get your charge point installation ordered now.
…if you need help, please fill in our application form at: https://www.evolutionsolutions.co.uk/home-charging/olev-grant-application/