The business case for bus operators transitioning to electric power is being ‘eroded’ warns Britain’s largest owner and operator of electric vehicle (EV) fleets, Zenobē, in a new paper detailing the future of the UK’s electric bus industry.
Zenobē, have called on the Government to act over the residual charges hitting low carbon bus depots across the UK, with the issue set out in their latest report ‘Charging Forward: How electric bus fleets can energise the UK’s cities’.
The rising costs stem from Ofgem’s Targeted Charging Review (TCR). Before the introduction of the TCR, transmission charges – costs associated with the bulk transmission of electricity - were solely linked to time of use. This meant bus operators benefitted from charging overnight during low-demand periods.
However, since the implementation of the TCR in 2023, EV bus operators have been unjustly penalised. Research undertaken by Zenobē at three electric bus depots across the country has found that under the TCR, energy bills for EV bus operators across the country could spike by more than 500%.
These increased costs damage the case for transitioning to electric power from the outset, despite the benefits that come with making the switch. The benefits, which are set out in the report, include cleaner air - with 16.4 million fewer tonnes of CO2 emitted across Great Britain, lower costs – with a net saving of £120,000 over 15 years compared with diesel buses, and a boost for local supply chains - when the EV batteries are repurposed in a second life.
With the Government having recently announced the continuation of the bus fare cap, the ongoing support for the sector has broadly been welcomed. But to ensure the business case for electric buses is protected and continues to attract investment into the UK, the Government’s energy and transport strategy needs to be aligned.
Zenobē is keen to ensure that bus operators can electrify their fleets at as low a cost as possible, allowing consumers to benefit from lower fares with or without Government support.
As part of its report, Zenobē has offered solutions to ensure electrification doesn’t have a false start. These include exempting electric bus operators from residual charges (as seen in the battery storage sector) and reclassifying bus depot operation as an Energy Intensive Industry (EII).
Commenting, Zenobē Founder Director Steven Meersman said: “The Targeted Charging Review is eroding the case for bus electrification by raising costs for operators by over 500%. The Government is clear that buses are a vital part of the UK economy. Resolving issues around the TCR is an important step to ensure the ecologically sustainable solutions is also the financially sustainable one. Zenobē are willing to work with Government and industry to make this happen.”