In December 2020, the Competition and Markets Authority (CMA) announced the launch of a ‘market study’ into the UK electric vehicle (EV) charging market, setting out to “help to make sure the [EV Charging] sector works well for consumers and prevent any competition problems before they become embedded.”
In the intervening period, the CMA has carried out an extensive stakeholder engagement exercise, sending detailed questionnaires to market participants and holding meetings with respondents to get their views.
The CMA has now completed its study and, last week, published a series of recommendations to UK government to deal with what the CMA considers to be the key bottleneck to the development of the EV sector: availability, access to, and spread of EV chargepoints. The CMA notes that projected demand means there will need to be more than 10 times as many publically accessible chargepoints as currently exist (25,000) in the UK by 2030.
Equally noteworthy is the CMA’s decision, alongside the publication of the final market study report, to open a formal competition law investigation into the provisioning of chargepoints at motorway service stations.
What were the CMA’s core conclusions?
The CMA made a number of key findings which underpin its recommendations to government and action taken under its competition law powers:
- as well as the headline point regarding the need for many more public EV chargepoints, the CMA is concerned about geographic discrepancies and the possible emergence of a ‘postcode lottery’ for access – it notes for example that only 1,000 out of 5,700 on-street chargepoints in the UK are outside of London;
- action is needed to stimulate investment in certain segments of the EV charging network, notably (i) on the motorways (see further below), (ii) on-street, and (iii) in remote locations; and
- there are emerging concerns that the overall EV charging sector is not straightforward for consumers to access and understand, for example in terms of comparing prices and ease of payment – the CMA believes EV charging should be as easy to purchase as petrol or diesel and, left unchecked, the market may not respond to this challenge.
Recommendations to government
The CMA has a wide range of powers available to it at the end of a market study. In this case, it considers that the scale of the challenge requires central government intervention. As such, it has decided to publish a set of recommendations for government designed to unlock greater investment, promote competition and boost trust in the sector. These include:
- the creation of a National Strategy for rolling out EV charging to 2030 and for the energy regulators Ofgem and Uregni (Northern Ireland) to ensure the industry speeds up grid connections, invests strategically and lowers connection costs;
- central funding (through the Rapid Charging Fund which was announced in 2020 as a £500 million government commitment to expansion of EV charging) should be deployed as soon as possible and targeted in particular at motorways and remote areas;
- Local Authorities to be more involved in (and better equipped for) the roll-out of on-street EV charging;
- the creation of open data and software standards for home chargepoints so people can benefit from smart charging and flexible energy systems; and
- a set of key principles to guide government’s overall oversight of the EV charging sector focussed on establishing transparency and simplicity for consumers.
The CMA also expresses its determination to keep the EV sector under close review and, where necessary, to take further action if it is developing in a way that is damaging competition and investment and not working well for people.
Competition Act investigation into motorway EV charging agreements
The CMA’s report recognises that the ability to charge easily and effectively on longer journeys is crucial to persuading drivers to make greater use of electric vehicles. During its investigation, the CMA noted that most motorway services have a single EV charging provider – Electric Highway – and concerns have been widely expressed as to the impact this may be having on customer satisfaction.
A significant reason for the current sole provider situation is long-term (10-15 year) exclusivity agreements between Electric Highway and the three main motorway services operators (Moto, Roadchef and Extra) who between them control two-thirds of all sites.
Long-term exclusivity agreements are often a feature in “new” markets where providers typically seek out such exclusivity in order to justify the investments they need to make to accelerate market growth. From a competition law perspective, the authorities will balance such commercial objectives against the scope of the exclusivity and the extent to which it operates to deter or prevent new market entrants.
Given its concerns as to the extent and quality of EV charging coverage across the UK’s motorways, is no surprise that the CMA has decided it needs to interrogate further the impact of the aforementioned agreements between Electric Highway and the service operators. As such, it has decided a formal competition law investigation is required. At the end of that investigation, the CMA could potentially force the parties to unwind their agreements or take any other measures it feels are necessary to promote effective competition.
The EV charging market remains of critical importance given the UK’s ever increasing focus on net zero greenhouse gas emissions, and the importance of a national EV charging infrastructure to reducing the significant contribution made to greenhouse gas emissions in the UK by the transport sector.
Through its market study report, the CMA has laid down the gauntlet to UK government to take active steps to ensure the UK’s EV charging network develops in an effective way. Equally importantly, by opening its formal investigation into the National Electric/service operator agreements, the CMA has signalled that it will take direct enforcement action itself where it has evidence that competition law may be being broken in the EV charging sector.
Alex Haffner, Partner - Competition & Regulation
Graham Spitz, Partner Corporate - Growth Capital
Alex and Graham are members of the Fladgate Green Energy Group and regularly advise companies and funds in connection with EV infrastructure