Where We Are
With record increases in global gas prices driving the UK’s energy price cap up by over 50%, as many as 22 million households across the country are looking at steeply rising bills. On average, direct debit customers on default tariffs will be paying £693 more for their energy after the 1st of April, compared to a £708 rise for those prepaying. Worryingly, there’s no sign that this is the even end of the increases, with a very real prospect of October 2022’s review seeing the price cap rising again - potentially by as much as 40%.
Of course, it’s not just customers who are feeling the pain of all this. Energy companies are collapsing so fast that some estimates suggest the number of UK suppliers could drop as low as 10 by September 2023. The energy price cap is designed to prevent businesses from charging exploitative prices, while still allowing a reasonable amount of any increases in their own costs to be passed on to their customers. Now, millions of those customers have been facing disruption, with dozens of suppliers going under as a direct result of soaring gas prices.
How We Can Deal with It
Much of the usual advice offered to households facing increasing energy bills simply won’t help under the current circumstances. Telling people to switch supplier, for instance, is pretty unlikely to see them ending up with a significantly better deal – and in some cases it may not even be a realistic option. Customers on standard variable tariffs, many of whom may have defaulted onto them when their fixed deals expired, are seeing the worst of the damage, though. That means switching over to a more price-secure fixed alternative is still a strong move. As gas prices rise, however, those fixed deals are getting more expensive all the time, so any delay could mean further pain.
Beyond the actual type of deal you’re on, many of the most valuable changes to make come down to eliminating energy wastage. Relatively minor everyday changes can combine into significant cost savings over a year. Nudging down your home’s main thermostat by just 1 degree, for instance, could equate to as much as £90 saved in a year. Simply turning off unused devices and air-drying clothes instead of tumble-drying them could be worth another £80 combined. Honestly, even if we weren’t in the middle of an energy cost crisis, many of these changes are things we should be doing anyway to bring down our household carbon footprints. Those same cost-cutting ideas we just mentioned above could result in an annual reduction of literally hundreds of kilos of CO2 emissions per home, for example.
As always, the sooner you act the greater the benefits – even if the best you can do is limit the damage. Energy bills are inevitably rising. However, acting now is always better than waiting – including when you’re asking for help. There are government schemes ranging from £200 loans to £150 Council Tax rebates for households in bands A-D. Just as importantly, get in touch with your energy supplier at the first sign that you might have trouble keeping up your payments. You might be able to arrange a repayment plan or holiday, for example, or gain valuable time to pay off debts through the government’s 60-Day Breathing Space Scheme.
What’s Coming Up?
Innovation powers the entire energy sector, and challenging times only serve to tighten that focus. Ofgem’s Strategic Innovation Fund is pumping £450 million into clean energy projects, working on everything from using satellite data in energy grid repair to developing large-scale heat storage options and boosting offshore wind turbine output. £1.5 million has gone to National Grid Gas Transmission and National Grid Electricity Transmission for green projects including cost-effective hydrogen compression technologies and a net-zero electricity network. The focus is always set on making energy cheaper, environmentally safer and more efficient to supply, with schemes like the Longer Duration Energy Storage competition offering a total of £68 million for innovative solutions to some of the energy sectors most pressing challenges.
Looking to the future, current forecasts are suggesting the UK will be generating more electricity from wind turbines than from fossil fuels and nuclear power combined by 2035. With over a trillion Internet of Things devices expected to be in use by then, demand for energy is going to be huge, but there’s reason to believe our carbon emissions will nevertheless be at an all-time low. Even today, a partnership between ilke Homes, Gresham House and SO Resi is set to build 1,000 precision-engineered homes per year that promise literally zero energy bills. If that sounds like science fiction, it’s actually the sound of innovation you’re hearing. High-efficiency solar panels combine with extremely energy efficient design in a home that actually generates surplus electricity – meaning the unneeded energy can actually be sold to generate income.
There’s never been a better time for big ideas, and that’s exactly what we’re continuing to see all over the energy industry. If you're in the business of breaking through barriers and pushing back boundaries, you could be due invaluable R&D Tax Relief. We can help you identify historic qualifying activity and get the credit you deserve.
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