Energy bills in the UK have risen dramatically since Putin invaded Ukraine and sanctions were placed on Russian fossil fuel exports. Even though the gas we burn to generate electricity, cook and heat some of our buildings comes from multiple sources, its price is set in accordance with international benchmarks. That means we have been exposed to severe price hikes. Not only that, but under our own arcane energy market rules, the most expensive wholesale price paid for gas dictates the base value of all forms of UK electricity, whether or not gas was actually used in its generation – including renewables. This is then topped-up by various additional charges, which include use of the networks and balancing the electricity system, metering costs and VAT.
Domestic customers have seen a tripling of their gas and electricity tariffs since the winter of 2020/21 which would have placed typical dual fuel bills at around £3,549 in the coming winter of 2022. However, government interventions will dampen these increases through the Energy Bills Support Scheme discount for winter 2022 and the Energy Price Guarantee announced in September, which will last for two years. Both of these schemes will come into effect from October 2022. Their net result will be to save around £1,000 off the predicted price rise for a typical domestic bill by limiting gas to 10.3p/kWh and electricity to 34p/kWh. Daily standing charges will vary by location and be added to the cost of units (kWh) consumed to make up the bill, but typically these are around £270 per year at present.
Commercial customers’ demand for electricity and gas varies enormously. Prices are often negotiated on fixed price deals lasting one to three years. Many contracts are renegotiated in September or October and there have been reports that new tariffs have quintupled, with electricity tariffs reaching 80p/kWh and gas around 27p/kWh. Under the Energy Bill Relief Scheme, the government has stepped-in to offer temporary support from October 2022, by capping these tariffs for six months at 21.1p/kWh for electricity and 7.5p/kWh for gas. It isn’t possible to generalise on the standing charge as this is related to individual energy supply arrangements.
Advice on domestic energy reduction and where to get support
- There is some excellent advice already published on reducing electricity and gas costs for domestic customers as well as a new government website that tailors information to your home.
- It is worth entering your details in the government advice site, even if you do not own the property, because the advice contains information about where financial support can be found to help implement some of the suggested energy saving measures. For example, people receiving benefits and state pensioners could be eligible for support through their Local Council and energy supplier under the Energy Company Obligation (ECO) scheme, the Boiler Upgrade Scheme, Cold Weather Payments and Winter Fuel Payments.
- Your Local Council may also offer additional support options available to those living in social housing. Councils should apply for funds from central government through a range of channels including:
- Individuals seeking help should start by reviewing the Energy Performance Certificate (EPC) rating of your dwelling. Also find out how much energy you are using from the details in the bills from your supplier.
- Smart meters can be requested from your supplier for free, if not already fitted, and will offer accurate billing as well as an in-home energy display that gives a precise picture of gas and electricity use. A useful feature is the ability to set a daily budget indicator so you can see how your consumption compares with your average daily target spend, if paying by direct debit.
- The Centre for Sustainable Energy (CSE) has published a handy guide to bills, with additional information for customers in the Western Power Distribution supply area. UK Power Networks, the network operator for East Anglia, has also published advice on how to save money on energy and water. Its page on reducing electricity bills links to additional services for vulnerable customers.
- Switching suppliers may still bring savings. For example, Octopus Energy is still offering incentives to switch your account (at the time of writing) through a referral link supplied by an existing customer. Comparison of energy deals can be found through links in this guide together with details of the information you require to switch and the process involved.
Building energy demand reduction measures
Whether you are in a domestic or commercial context, the remainder of this article offers advice on measures to reduce energy demand from your building. These measures range in their cost of implementation and the length of time required to pay back on the investment from the savings they help you make. If considering a whole building retrofit scheme, even if it is not carried out all at once, understanding a hierarchical approach to implementing different measures will aid with planning. CSE offers a useful guide to key considerations when contemplating a full retrofit programme.
Comfort levels are related to the temperature in your room, as illustrated in this guide, recommending a temperature range between 19ºC to 21ºC for occupied rooms. In older houses, achieving these temperatures while keeping bills down will depend on measures, ranging from the simplest draft-stopping (fix any broken windows or ill-fitting doors, for example), to retrofitting comprehensive insulation to your existing building envelope. The list below arranges interventions in roughly increasing order of cost. The measures will have differing impacts on saving energy, which is also dependent on your circumstances and behaviour with energy.
- Turn off appliances and lights that are not required to be in use.
- Get a smart meter with in-home display.
- Stop drafts by draft proofing leaky doors, chimneys and windows of your home.
- Insulate your roof, hot water pipes and hot water cylinder if you have one.
- Replace incandescent light bulbs with LEDs.
- Make sure your boiler is serviced and tuned to your requirements. Bleed your radiators at the beginning of the winter.
- Adjust your combo boiler central heating flow temperature to 60ºC or below, and reduce the temperature to which you heat the hot water. Nesta estimated it could save around £112 a year and 172kg in carbon emissions. They have created a step by step guide explaining what to do here.
- Install thermostatic radiator valves, or if you have them already, lower their settings.
- Install some smart controls – such as a smart boiler thermostat, or smart radiator valves. Wet heating systems can also be zoned to affect different portions of a property heated by the same boiler.
- Replace single glazed windows, where permitted, with double or triple glazed windows and doors.
- Insulate floors and walls. There are different approaches to solid walls and cavity walls depending on your building fabric type. Solid wall insulation options include internal or external insulation measures.
- If you have sealed your home from drafts and installed the insulation measures listed above, then it could also be advantageous to consider adding a mechanical heat recovery and ventilation (MHRV) system. This can improve air quality in your home as well as save on heating bills. It should be considered especially where any living space has been made airtight.
- Install solar PV and or solar thermal panels where possible. See the section on community energy for larger and commercial applications on the NCS website.
- Install an energy storage system to store surplus heat or electricity generated by your PV.
- Replace your old gas or oil-fired boiler with a heat pump. You may be eligible for a grant under the Boiler Upgrade Scheme.
Damp patches, condensation and mould are issues in many homes that have reduced ventilation or are unheated in places. As well as saving your heating bills this needs to be addressed quickly, especially where draft proofing has reduced ventilation to a minimum.
For many years, the economics of energy reduction have not been correctly aligned. Energy was cheap, in relative terms, and insulation measures looked expensive in comparison. That situation has now changed dramatically. Increased energy prices, although painful, are provoking many people and businesses to review their energy use and consider investing in reduction measures. Any actions you take after reading this article will be part of that societal shift. We must all become more energy efficient to meet our climate change reduction obligations and there are encouraging signs that more and more people are now ready to make the necessary shifts in behaviour and investment.