Cheap EV charging - with a twist..?
I was in an interesting conversation this week with Alex Georgianna from Steer at the Charge UK summer meeting
Alex was talking about different charging models that CPOs can adopt.
His basic thesis was that for larger fleets there should be a way for a CPO to go to the fleet and say ‘If you give us all our charging - providing it is more than X MWh/ month - we will give you a discount for doing that.’
I think that’s an excellent suggestion. It helps fleets budget their charging costs, it gives CPOs a consistent stream of income and it helps the CPO investors feel comfortable that their investment will be paid off.
Separate to that, guests of the podcast Paua announced today that they are working with Source EV to do something very similar to that. Paua offers the discount service for fleets charging at Source hubs subject to agreement with Source. The fleet customer provides permission to share usage data and Paua will analyse this usage data to provide insights to Source, which they can then use to offer discounts that suit that customers’ charging behaviour. This means the more they charge the more they save.
It’s not quite the same thing that Alex was discussing. But it is moving EV drivers more towards a charging utopia where the price is nowhere near as high as some of the horrendous tariffs we see with certain CPOs (You know who you are!)
But I want to see it go further. Why can’t I, as an individual, make a deal with a CPO like that? Why can’t I go to someone like Gridserve and say ‘Hey, I’ll do ALL my charging at your sites if you give me a discount’
The reason is obvious - I’m not a big enough customer to be able to do that. With the amount of public charging I do in a year Gridserve would probably lose money giving me a discount on that basis.
However, there are other ways around this. I mentioned roaming services a moment or two back. What is to stop someone like Zapmap or Octopus Electroverse going to Osprey Charging and saying ‘We will funnel our users to your chargers in exchange for a discount on charging if we hit a specific amount of energy?’ This could easily be achieved by looking at the data around charges in the UK and who uses which providers. The top two most-used CPOs on the network are bp Pulse and Gridserve - neither of which roam with Zapmap or Octopus Electroverse - so moving customers across from one of those two to, say Osprey Charging, Instavolt or Fastned - all of whom rank higher than Gridserve or bp Pulse in the Zapmap customer satisfaction survey - should simply be a case of appropriate targeting and marketing.
Which then raises the next question. As an EV driver who would, presumably, prefer their charging to be as easy and seamless as possible, would you move from something such as contactless charging (ubiquitous and mandated by law) to using a roaming service if it gave you cheaper charging at a number of CPOs?
For many people - myself included - this would be a hard ‘Yes!’. I tend to use roaming providers over contactless because it is easier and quicker - especially with an RFID card. Stopping at specific CPOs who allow me to use this roaming services AND getting a discount would be a no brainer for me.
Indeed Octopus Electroverse already provides an 8% discount on certain CPOs if you are an Octopus Energy customer. This isn’t quite the same thing as, I believe, that discount comes from Octopus Energy themselves rather than the CPO.
So what’s in it for the CPO? Utilisation. The key metric driving CPO profitability is utilisation. If they can get twice as many people charging at a given site they can massively increase their profit at that site. It’s all to do with the overheads. The basic price they pay for a kWh of electricity is variable (within a margin) and the total costs depends on how much energy is dispensed. But things such as rent, landlord fees, maintenance fees, helpline fees are all fixed. This figure doesn’t change regardless of whether they dispense 1kWh of energy at a site or 1MWh of energy.
But with a larger amount of energy being dispensed they can split the fixed overheads across a larger number of kWhs. The overhead per kWh is therefore smaller and the profit per kWh is higher. If a site has overheads of £50,000 per year and distributes 1MWh of energy the cost of the overhead accounts for 5p/kWh. But if you can double the utilisation at a site the overhead reduces to 2.5p/kWh. That increases the profit at that site by £25,000 per year (all else being equal).
So the question is how much would a CPO be willing to reduce it’s profit margin in order to increase its utilisation? Obviously if they’re reducing the price by 5p/kWh they would want utilisation to increase to a point where they are improving their profit margin by more than 2.5p/kWh. Otherwise it makes no financial sense. Without knowing the details of the financial calculation of each CPO (Which are all shrouded in secrecy) this becomes a bit of a fool’s errand
But we can all dream, right?