What does the new energy price cap mean for EV charging? How bills will come down and how to save even more

Britain’s energy price cap is being cut from 1 July, bringing some relief for millions of households struggling with the cost of living. 

After 18 months of soaring energy prices, regulator Ofgem said in May that it would reduce the maximum price suppliers could charge from 34p per kWh to 30p, potentially saving an average household £426 per year on their electricity bills.

The move means many electric car drivers who charge at home will see a drop in their costs but will still be paying substantially more than they were two years ago. In 2021, the average price was around 19p per kWh, making the jump to the current 34p per kWh a painful one. Overnight the cost of charging a vehicle almost doubled, eating into the cheaper running costs EVs enjoy compared with petrol and diesel cars. 

For EV owners on standard variable tariff July’s reduction means the cost of fully charging a family SUV such as the Kia Niro EV, which has a 64.8kWh battery, will be £19.44, down from the current £22.03. 

However, motorists are also being urged to look for preferential tariffs for EV owners to save even more money. Prior to the energy crisis, many electricity suppliers offered special low rates for drivers charging EVs at certain times. Over the last 18 months, most suppliers stopped offering these favourable rates to new customers but with an apparent settling of the market, many have opened up their offers to new clients.

They mean that drivers could pay as little as 7.5p per kWh, saving them hundreds of pounds a year in running costs. 

David Watson, CEO of smart home charger maker Ohme commented: “It’s great that the standard variable tariff is dropping which will help EV drivers reduce their charging bills during this cost of living crisis. But EV drivers can lower their bills more by changing to an off-peak tariff. 

“If their existing energy provider doesn’t offer an off-peak tariff, then they should consider switching to one that does, to maximise the savings of running an EV.”

Providers such as Octopus, Ovo, EDF and British Gas offer overnight rates of between 7.5p and 9.5p per kWh, meaning an average full charge could cost as little as £4.86 if carried out between 12am and 5am. For an EV doing 3.5 miles/kWh and the average UK mileage of 6,800 miles, that equates to annual charging costs of £145, compared to £582 on the standard variable tariff. 

It remains to be seen whether public charging costs also come down in the wake of July’s change. Over the last year the cost of public charging has risen sharply as providers pass on the rising cost of energy to drivers. According to Zap-Map, the average cost of rapid/ultra-rapid charging has risen 54% since May 2023 and now stands at 74p per kWh  At its worst, Osprey’s rates for its ultra-rapid devices hit £1 per kWh before falling back to 79p.

Major charging providers argue that they could cut costs for drivers if the government was to bring VAT on public chargers in line with domestic rates. Currently, VAT on electricity at public devices is charged at 20%, compared with 5% for domestic energy.