Energy crisis to hit UK households

Image copyright Getty Images Image caption The UK has almost a million high-energy consumption homes The UK is racing towards a winter energy crisis – as millions of homeowners face paying up to £600 extra …

Image copyright Getty Images Image caption The UK has almost a million high-energy consumption homes

The UK is racing towards a winter energy crisis – as millions of homeowners face paying up to £600 extra a year to heat their homes because of a lack of investment.

After a decade of falling demand, the green regulatory bodies are forcing energy companies to slash their tariffs by 12% to try to win back their customers.

The high energy demands are in part caused by new builds too, but the firms can’t replace the heat they lose due to cheaper coal power, or the heat they lose from people relying on energy drinks in the mornings.

One in four homes in the UK are significantly more inefficient than the building regulations require – 20% are allowed to run hot water at 40C, and many are running at less than 20% energy use.

But millions of other households can also run their homes at 60C and can use little or no electricity, as the panels on their roof supply the electricity.

Image copyright Getty Images Image caption Demand is increasing, partly because of growth in the built-up areas.

The proportion of energy that goes into heating people’s homes was 15% in 1975. In 2006 it was 12%, but by 2018 it will be 13.5%.

Even that figure is at risk – the reduced demand has meant a shortfall in generating electricity from brown coal power, which is used to heat homes.

As a result, 16 out of the 22 gigawatts – almost 20% – of low-carbon generation capacity, such as windfarms, offshore wind and solar panels, is either already sold or will be sold soon, and the government’s Green Deal has only invested £185m in some forms of insulation for homes that are already fit to heat themselves.

In the middle of this, there’s high demand for high-energy consumption homes – and there are 2.3 million of them.

All this is happening because regulations are forcing energy companies to cut their standard variable tariffs (SVT), unless the customers switch to smaller providers with cheaper tariffs.

People could be paying as much as £600 more a year than they should be paying to heat their homes, the think tank Carbon Tracker says.

Image copyright Getty Images Image caption In January, the regulator Ofgem told energy companies not to increase prices

In January, Ofgem told companies they could not increase prices as that was against the interests of society.

Instead the Energy Services Association (ESA) put forward a 30% discount for some vulnerable customers and agreed to help the British Gas-owned giant SSE to raise some of the tariffs on a 2% discount – called a floor price – but prices are still set by the wholesale prices that suppliers have to pay.

Liam Hodgins, who is head of energy regulation at the Chartered Institute of Energy, says higher tariffs are a “blatant intervention” and that price caps should be introduced.

Read the carbon tracker article here.

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