It’s no secret that electricity prices have been rising across Europe, the rising energy prices have dominated headlines throughout the summer. According to the Household Energy Price Index average electricity costs in Europe have risen around 9p per kWh YoY from July 2021 to July 2022. In the UK electricity costs have risen around 36p per kWH across the same period – which makes a big impact to your electricity bill.
Europe is facing an electricity crisis. Energy costs are rising at an alarming rate, and there is no end in sight. This is a problem that is affecting all of Europe, and it is one that needs to be addressed immediately.
So if electricity is expensive, and getting more expensive every month, can electric vehicles really help us meet net zero?
What is causing the rising electricity cost?
There are a number of factors that are contributing to the rising cost of electricity in Europe. One of the main factors is the increasing cost of fossil fuels. Coal and natural gas prices are rising globally, and this is causing the price of electricity to increase.
Another factor is the growing demand for electricity. As the number of EVs grows across Europe, so does the demand for electricity. To meet net zero targets by 2050 it's estimated that electricity consumption will exceed four to five times from 2015 to 2050. so how can electric vehicles solve for a zero carbon future when electricity is so expensive?
We need more renewable energy
As energy bills continue to rise, renewables can be seen as a way to reduce the kwh cost of electricity. Solar, wind, and hydroelectric power are all key components of a clean energy future, and we need to invest in all of them if we want to make a real difference to energy prices and electricity bills. Finland's LUT and the Energy Watch Group produced a report detailing the transition to renewable energy and the methodology to reach a 100% renewable energy market by 2050.
How much energy can solar provide?
Solar power is one of the most promising renewable energy sources, but how much energy can solar panels really provide? To power the whole world, it's estimated that we'd need around 1.1 million square kilometers of solar panels - an area about the size of South Africa. While this sounds like a lot of land, 87% of world nations could power their whole national grid by covering just 5% of their landmass with solar panels. In the UK - only 6% of land is currently built upon, meaning that there is potentially 94% of the UK landmass that could eligible for hosting a solar farm.
The estimated cost of building this kind of global solar infrastructure is around 5 trillion US dollars - around 10% of the world's GDP but this significant investment would considerably reduce the cost of electricity per kWh while lowering our global carbon footprint.
What other forms of renewables can lower energy costs?
Wind power is one of the most renewable energy sources available, and it has been used for centuries to power everything from sailboats to windmills. In recent years, wind power has become increasingly popular as a way to generate electricity. Wind turbines, which are used to generate electricity from the wind, can be found in many different parts of the world - but how much energy can wind power provide?
According to LUT's model wind power will account for around 18% of energy production by 2050. Today wind power provides 12% of the world's energy usage removing around 1.1 billion tonnes of CO2 from our global carbon footprint.
There are many advantages to using wind power. Wind turbines do not produce greenhouse gases, which are a major cause of climate change. Wind power is also very efficient form of electricity generation and can be used in areas where solar energy generation would not be viable. In some areas, wind power is the cheapest form of electricity available which results in lower energy bills.
There are some disadvantages to wind power as well. Wind turbines can be very expensive to build, and they require a lot of land. Wind turbines also require a minimum amount of wind to operate, so they are not always a reliable and can cause peaks and troughs in the amount of energy available on the national grid and a more variable cost per kwh.
Energy bills compared to fuel costs
While electricity is certainly becoming more expensive, traditional vehicle fuels are becoming more expensive too. The price of petrol is a major concern for many people, as it is still a necessary expense while most drivers drive ICE vehicles. The cost of petrol can have a big impact on people's budgets, and it can also affect the economy as a whole.
There are a number of factors that contribute to the cost of petrol, including the cost of crude oil, taxes, and transportation costs. The price of petrol also fluctuates depending on the demand for it.
While electricity prices and petrol costs prices are fluctuating at the moment, currently the average cost of electricity in the UK is 14.37p per kwh under the government's energy price cap. This means that the average cost of running an EV would be around 4.5p per mile. The average UK cost of petrol currently sits at 172p per litre - meaning that the average sized car costs around 16p per mile to run. The UK currently has the highest energy costs in Europe, so European EV drivers can stand to save more than 4x as much per mile by driving an EV over a petrol car.
Driving an EV definitely increases energy bills, but by removing costs for petrol or diesel, EV drivers pay less for driving on their total household bills.
How can EVs impact your electricity bill less?
As energy costs rise, there are plenty of tools to help EV drivers see less of an increase in their electricity bills. Firstly check with your energy supplier- they may have energy deals exclusively for EV drivers. Most major energy companies have special EV electricity tariffs designed to make charging an EV cheaper. These tariffs often work by encouraging drivers to charge during off peak hours and as a result drivers pay a much cheaper off peak rate.
Energy companies can also offer a low fixed rate tariff for any energy used for EV charging using smart meter data. This is done by measuring power consumption data from your smart meter and EV charger and charging the lower rate for the energy used by the EV charger while the remaining energy used is charged at a higher rate. These tariffs often mean that electricity is priced much lower than the energy price cap.
Smart charging can also help reduce energy consumption and ensure that energy costs are minimised by charging when energy is cheaper, sourced from renewables, or uses less CO2. By switching your energy usage to off peak times you can you save money and save the planet.
Are rising prices affecting public charging?
Public charging is always a little more expensive than charging at home, its the price we pay for convenience! Public charging providers have naturally had to increase prices to combat the high cost of electricity, so it's important to compare prices while out and about to help save money and make sure you're paying the right price for your charge.
Monta's new fair pricing feature helps you check if you're paying the right unit cost for your charge by comparing the price offered to the average wholesale costs.
Are cheap renewable energy and EVs the answer?
In short no - EVs and renewables are both important to help us reach net zero, but there are lots of other things we need to do to reach our collective goal. Keep an eye on our World EV Day series to learn more.