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Reducing consumption is the only way to permanently solve the UK energy crisis
22/6/2022
4 min read
With household energy bills soaring and energy company bosses predicting that 40% of households in England and Wales will be in fuel poverty later this year, Richard Cox of Effective Energy Group argues that reducing consumption is the only sure-fire way of tackling the energy crisis.
Ofgem is predicting that the price cap rise in October 2022 could go as high as £2,800, and others warn that may not be the end of it. As a result, the numbers now in fuel poverty and those who are likely to follow them are staggering – more than 6mn at present, over 10mn after October. Meanwhile, customer debt is predicted to increase by 50% from its current eye-watering level of £1.6bn.
UK Chancellor Rishi Sunak’s recent announcement of an energy company windfall tax, albeit one masquerading as an energy profits levy, has provided some relief against the battering billpayers across the UK are taking. Every household in the UK will receive £400 towards energy bills in October; low-income families will get an additional £650; there’s also an additional £150 for those with disabilities; and an increase in the winter fuel allowance to £300.
While this is a huge improvement on the initial plan of a £150 council tax rebate and a £200 loan it does feel like we’re still dealing in small steps at a time when everything points to a long and arduous hike.
Furthermore, the levy and pay-outs simply aren’t sustainable. If, as expected, prices continue to rise we need to be future-proofing ourselves against rising bills rather than throwing ‘band aids’ at the issue.
Yes, fracking and an increase in nuclear power production have been widely reported as potential long-term solutions, but missing from all the reporting has been the fact that there is a proven way of tackling spiralling energy bills immediately.
Programmes to cut consumption
Government-funded Local Authority Delivery (LAD), Warm Home Discount (WHD) and Home Upgrade Grant (HUG) schemes, plus the Energy Company Obligation (ECO) all provide local authority-administered funding for the installation of measures to reduce energy consumption and so reduce household bills.
The latest of the ECO schemes, ECO4 is set to replace ECO3 in the next few months. When it does, the funding for retrofitting homes with energy saving measures will increase from around £650mn/y under ECO3 to £1bn/y under ECO4.
Meanwhile, at Effective Energy we have our own scheme – Help4Homes – that provides energy saving advice, free heating, insulation and energy efficient white goods as well as an income maximisation service for low-income and vulnerable households struggling to pay their energy bills and meet the qualifying criteria of the current crop of government schemes. Its first funding cycle saw us help over 2,000-households in just 18 weeks, delivering everything from energy reduction measures through to significant increases in household incomes.
Of course, it isn’t just low-income households being affected – everyone is taking a hit, but everyone can be helped by reducing their energy consumption. And I strongly believe that a two-pronged approach to counteracting rising energy prices should be given serious consideration.
Incentivise action
First, all homes that are categorised as being in fuel poverty (ie greater than 10% of their monthly income being spent on energy bills) should be surveyed, given an energy efficient plan that outlines steps and savings available, and then supported financially through means-tested measures to take the steps needed to make the biggest possible savings.
Secondly, all other households (non-fuel poor) should be incentivised into taking action to reduce energy consumption through green grants; fiscal incentives such as reductions on council tax and stamp duty for energy efficient properties; and help such as low interest or interest free loans to pay for measures.
We all know that once prices go up, they rarely go back down, which in practical terms means that despite the feverish reaction to April’s price rise and the outrage that will surely accompany October’s, these prices will soon become the norm. The only way to quickly get monthly bills to manageable levels and keep them there is by reducing energy consumption – and green measures are proven to do this.
The views and opinions expressed in this article are strictly those of the author only and are not necessarily given or endorsed by or on behalf of the Energy Institute.
