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“Watt” Next – Could Surging Energy Bills Short Circuit U.K. EV Plan?

With both society and the economy struggling for some form of normality post-pandemic, the gloom looks set to continue as a fresh blow dealt by the U.K.’s regulatory body, as The Office of Gas and Electricity Markets (Ofgem), announced that energy prices will continue to rise. This disclosure is in relation to the energy price cap, a biannual review introduced in 2019 to limit rates at which energy suppliers can charge consumers; reaching an all-time high of £1,277 in October 2021, and is due to reach £1,971 by April 2022. Expected to affect around 22 million households, and as of 2019 an estimated figure of 3.4 million in England alone were affected by “fuel poverty”, with this year promising a continuum of recent hardships for even more as the overall cost of living rises. 

The source of this inflation is influenced by several economic and geopolitical factors: adverse weather conditions and an increased demand for energy resources over lockdown across the globe (particularly in Europe), coupled with a period of decarbonisation and a lack of generated renewable energy reserves, meant that Russia’s hesitancy over supplying gas to the rest of the continent due to a desire to push approval of the Nord Stream 2 pipeline was felt even harder on a global scale. Russia has faced growing criticism for this approach, notably by European Commission Vice President, Valdis Dombrovskis, who stated that “unfortunately, this problem of weaponisation of gas flows is not new”. Furthermore, the U.K.’s over-dependency on imported gas, with government statistics indicating it accounts for 50% of its gas reserves with a third of the country’s electrical generation supported by gas, bide as reasoning for exposing its citizens to an increase of energy bills. As the government scrambles to alleviate growing pressures on the taxpayer, the “Ten Point Plan for a Green Revolution” looks to face uncertainty. So, “watt” next for the future of electric vehicles (EV)?

Figures from the Society of Motor Manufacturers and Traders (SMMT) convey that there was a Energy Bills Going Up76.3% increase in the amount of EVs bought in 2021 in comparison to 2020. However, electric vehicle owners will invariably feel the effects of energy prices in general, as the rise in the cost of EV charging correlates with current electrical trends. While the initial retail cost of an EV is more than a carbon-fuelled vehicle on average, the cost of refuelling looked to benefit those that switched to a more environmentally-friendly vehicle, with the average price per kilowatt-hour (kWh) of electricity in the U.K. being at around 24p as of September 2021. Now, experts predict that it could cost 69p by April 2022.

Moreover, a spokesperson for Energy UK, the trade association for the energy industry, said that if problems remain and energy prices increase more generally, retailer investment in such technology is less likely and ultimately may hinder the policies in place to ensure that the U.K is an emissions-free country by 2050. However, there are positives to take for those with interests in electrified transport. Energy UK also remarked that these unprecedented times were “an exceptional period… and long term, electricity will be cheaper”. One way energy prices could be placated, as well as alleviating growing demands for appropriate EV infrastructure, is down to the fact that the batteries used in EVs and in national power networks are “energy source agnostic” according to experts. This enables the potential for the harvest of a multitude of energy resources to run them; be it solar, hydroelectric or nuclear power.

With the development of eco-friendly energy infrastructure and an expected increase in the amount of renewable energy sources fitted in private residences, one can be hopeful for the future of electric vehicles, promising our pockets and our planet a greener future.

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