Global menu

Our global pages

Close

Selling electricity to Electric Vehicle drivers

  • United Kingdom
  • Energy and infrastructure

21-04-2022

Simon Davies comments:In light of the inevitable rapid increase in the deployment of EV chargers towards 2030, it is essential that EV Chargepoint owners and other participants in this market understand their regulatory obligations, as supply of electricity without a licence or exemption is a criminal offence. The electricity regulations were not designed with EV charging supply arrangements in mind and the industry will therefore welcome this guidance from Ofgem, which means that supply from a charging station to an EV will, in most cases, not be captured by the regulations - and the electricity supply to the EV charging station is also likely to fall within an exemption.”  

The Government’s recent Electric Vehicle Infrastructure Strategy sets out proposals and funding to ensure at least 300,000 public chargers by 2030 and measures to facilitate further deployment by the private sector ahead of the 2030 ban on sales of all new petrol and diesel cars and vans. Increasing numbers of Electric Vehicles (“EVs”) and the demand for a rapid roll-out of EV chargepoints presents numerous commercial opportunities and risks.  For those involved in the commercial supply of electricity to EV drivers or who are considering involvement in the sector, one area of risk is failure to comply with the relevant regulatory framework.  This is a tightly regulated sector and there are potentially serious consequences if mistakes are made.     

In this briefing, we provide a summary of the key regulations that apply in the context of supplying electricity to EV drivers.  This can be read in tandem with new guidance on the rules for supplying electricity to EV drivers recently published by Ofgem.  The guidance helpfully sets out the different charging models which Ofgem has encountered and seeks to explain how the rules apply in each scenario. 

Overview of the regulatory framework

Persons engaged in the supply of electricity must obtain a licence under the Electricity Act 1989 (“the Electricity Act”), unless an exemption applies.  Supplying electricity without a licence, or an exemption, is a criminal offence[1]

The Electricity Act defines supply as, “in relation to electricity, its supply to premises where – (a) it is conveyed to the premises wholly or partly by means of a distribution system, or (b) (without being so conveyed) it is supplied to the premises from a substation to which it has been conveyed by means of a transmission system[2].

Supply therefore involves the transportation of electricity to premises, which includes any land, building or structure[3], and implies a fixed location and degree of permanence.    

Charging EVs: how the regulatory framework applies

By their very nature, EVs are not fixed to one location and are, instead, mobile.  Accordingly, Ofgem has taken the view that, in most circumstances, EVs will not be considered as premises[4]. This means that the sale of electricity to EV drivers will typically not be supply for the purposes of the Electricity Act.

Ofgem does consider, however, that the conveyance of electricity to the chargepoint (or other infrastructure) will be a supply on the basis that the chargepoint is a structure and falls within the definition of premises. 

Therefore, the conveyance of electricity to an EV chargepoint (or the premises at which it is located) will be supply, but the charging of the EV from the chargepoint will not be supply.  Accordingly, an individual or organisation involved in the supply of electricity to a chargepoint must be licensed or exempt from the requirement to hold a licence.  The chargepoint operator (“CPO”) will not be subject to the supply or exempt supply regulations, but will instead be subject to trading standards and general consumer protection law. 

Licence exemptions

Licence exemptions can be granted in two ways: either individually by BEIS, or by class exemption under the Electricity (Class Exemptions from the Requirement for a Licence) Order 2001 (“Exemptions Order”).  The class exemptions which relate to the supply of electricity are set out in Schedule 4.

The exemption which is most relevant to the charging of EVs is Resale (Class B).  This allows an individual or organisation (other than a licensed supplier) to resell electricity from its premises to consumers at other premises.  The individual or organisation may also resell electricity to consumers on their own premises, but this is not considered to be supply. 

The electricity which the individual or organisation resells will most likely come from a licensed supplier or a supplier exempt under another provision of Schedule 4 (i.e. Onsite Supply (Class C)).  The act of reselling this electricity to consumers at other premises is a supply which will be exempt under the Resale (Class B) exemption.  Where the electricity is resold on the same premises, this is considered as reselling rather than supplying.  In both situations, the individual or organisation will be subject to rules on the Maximum Resale Price (“MRP”) where the electricity is resold at a domestic premises (although Ofgem clarified in 2014 that where the reselling is from a dedicated EV charging point (rather than a standard plug and socket) the MRP does not apply).  The MRP is, since 1 January 2003, the same price as that paid by the person who is reselling it.   

Exempt suppliers are also subject to rules set out in the Electricity Act, including obligations relating to customer contracts, customer information and determination of disputes, so these need to be taken into consideration by the individual or organisation when setting up supply arrangements. 

Conclusion

Liz Wild comments: “Ofgem’s recently issued guidance on this topic provides useful clarification as to the regulatory status of some common EV charging scenarios - twice as many scenarios as were identified in Ofgem’s last guidance on the same topic, in 2019.  We expect it will prove a helpful point of reference for the sector in the immediate future, but context is important and many situations will depend on their own particular circumstances. Given the pace of innovation in the sector the guidance may soon need updating again.”

This is a rapidly developing area, and regulations will have to adapt to keep pace with those developments, and legal advice should be sought at the outset when an EV charging project is planned. If you would like us to assist you keep up to date with regulatory developments in this area, please get in touch.


[1]         Section 4(1), Electricity Act 1989

[2]         Section 4(4), Electricity Act 1989

[3]         Section 64(1), Electricity Act 1989

[4]         Ofgem identify electric motorhomes as a case where in certain circumstances an EV could constitute a premises.