The growth of the UK’s EV charging network could be stunted by significant and unexpected cost hikes that mean many charging hubs aren’t currently turning a profit.

Ian Johnston, CEO of charger operator Osprey, told Autocar that “we are nowhere near profitability” because of skyrocketing electric grid costs.

Dora Clarke, Osprey’s head of external affairs, said the standing charge paid by the company for a “typical” hub in the Midlands with eight chargers has increased over the past three years from £99 per year to more than £8600. Osprey operates 56 such hubs nationally.

Osprey is not alone in facing this problem. According to a new report published by EV charging body ChargeUK, standing fees have increased by 462% for rapid-charging hubs (those whose chargers put out 50kW or more) and 389% for slow-charging hubs (sub-50kW) over the past two years.

ChargeUK attributed the hike in fees to energy regulator Ofgem’s Targeted Charging Review, which means businesses now have to pay for the capacity of the energy they could use, rather than what they actually draw. As a result, charging companies are “penalised” for building new hubs that are rarely used to their full extent, said ChargeUK.

Clarke said: “Where those costs – and especially grid costs – have jumped, it then makes that site loss-making. You’re not making any money unless that site suddenly goes off the charts in terms of utilisation [by customers]. For an average to good utilisation, the cost just pushes it into loss-making.

“On the network level, with lots of different hubs in different regions with different utilisations, the challenge is ensuring you’re not ending up with too many of these hubs that are just loss-making.”

Johnston added: “The big picture is we and our peers have been doing this for seven or eight years now, we’ve invested hundreds of millions and we are nowhere near profitability. 

We were meant to be, but the cost profile of running a network has changed so much because of these grid charges.

“The problem is you can’t keep burning £100 million a year building a new site if you have no prospect of getting to profi tability – if those sites aren’t actually covering their own cost.

“That’s the bit we’re trying to get the government to understand: if we want to see this infrastructure keep coming, you’ve got to show a pathway to profitability, which these costs are preventing at the moment.”

However, Johnston remained buoyant about the state of the wider charging industry.

“The big picture is that the rollout is still incredibly strong,” he said, noting that the number of ultra-rapid chargers (150kW or higher) in the UK had increased by 52% year on year by the end of August.

But the rising costs “are causing us to be more cautious”, he said. “There’s no doubt the realities of running these businesses in this climate are a lot harder than two years ago.”

Government support needed, says BP

Multiple charging firms have told Autocar that high operating costs are hampering their ability to lower the price of charging, which could make public charging more accessible and drive up EV adoption.

A key issue, alongside electricity costs, is tax so government support is needed, charging companies argue.

General manager of BP Pulse Valerio Ferro said: “What could drive the price [of fast and ultra-fast charging] down? It will never compete with home or street charging. If you think, there is a VAT that is 20% – it is 5% for home charging; you have standing charges, which went up 10 times; and now there are talks of putting business rates on top. So there are lots of costs which are slapped on us that we have to deal with.

“In other countries in Europe, they have tools – such as the Renewable Energy Directive – to lower the price. In the UK, we have less tools to drive down that cost and the investment is still high. In some cases, power is far away, so that’s what makes it really expensive.

“But it’s not that companies are making tons of money at the moment, because these [investments in a charging network] are long-term investments.

“So we would like to drive the cost down, because we feel that it will make it more accessible for everyone, but we need support from the government to make sure that some of the costs can be removed.”

Indeed, ChargeUK said the price paid by motorists using public chargers has risen by 32% since 2022. It added that, today, around 20p-30p of the price paid per kWh when charging at a rapid or ultra-rapid hub is now taken as part of the grid’s standing order charge.

Speaking about parity with slower on-street charging, Ferro said: “I don’t think the price will ever compete with street charging, because the investment is completely different – the cost of the charger, the infrastructure that you need, the power – but it could go down if we have the right support.”