Energy market moves mean more pressure on spiralling energy bills

Government efforts to refocus energy market strategy will mean more pressure on spiralling energy bills.

At the heart of national planning is the compulsion, as well as increasing desire, to move away from energy production that uses coal and gas, so keeping the commitment to carbon emission reduction targets.

But all the production options carry an extra financial burden in that they are currently much more expensive ways to generate energy than the traditional carbon-intensive methods.

We generate our energy from four main sources:

• Gas produces 47 % of electricity
• Coal-fired power stations provide around 28%
• Nuclear power provides about 16% but most UK nuclear plans are due to close in the next decade. One new facility is planned.
• Renewables sources generate 7% of electricity.

Source: http://www.energy-uk.org.uk/energy-industry/electricity-generation.html

The Department for Energy and Climate Change (DECC) advises that natural gas, wind and solar is the main short-term focus with renewables taking greater share and by 2030, it expects renewables to be the biggest source of energy used in electricity generation, around 40% of the total.

In the late 2020s, nuclear is also set to contribute more as replacement nuclear power stations come online.

The renewables sector has a refreshed focus on solar power and DECC has just published the second part of its national solar strategy, Delivering a Brighter Future.

The goal is to install 20GW of solar capacity by 2020, up from around 2.7GW currently. There is a significant move away from large scale solar farms, towards solar power installations on buildings.

The Government is also actively planning a retreat from onshore wind farms after the next election, moving the focus to offshore. The challenge here is that, according to the Royal Academy of Engineering (RAE) replacing an onshore turbine with an offshore wind power alternative would cost £300,000 a year more in subsidies.

Onshore wind turbines account for 7GW, around 5% of electricity generation, and offshore 4GW (3.3%).

The additional costs would almost certainly be met by higher energy bills. Equally disconcerting, the RAE advises that a cap on turbines would make it harder to meet the UK’s legally binding targets for renewable energy and cutting carbon emissions.

Better news is that the RAE concludes that electricity generating capacity from wind power could more than double from the current 11GW by 2020 without any changes to how the energy system is balanced.

However, in all this planning there is the uncomfortable truth that energy production costs will continue to rise ahead of inflation, even if there are short-term fluctuations in the price of gas.

At the same time, support for energy efficiency continues to splutter and official figures show that cuts to green schemes will mean more than 400,000 badly insulated households will miss out on help to reduce their energy costs.

That really leaves households, businesses and organisations with the option of switching supplier to reduce their energy costs and/or making every effort to cut consumption through energy efficiencies.

Switching supplier is a very short-term solution and, as the many media reports underline, is fraught with challenges. Even if consumers take the plunge and move their accounts, we’d say, why stop at switching?

Hone in on energy and water guzzlers in the home and at work. Cut electricity costs by up to 90% and keep the quality by swapping out old light bulbs with LED lighting, which should repay your investment in around six months, according to the Guardian, and then go on saving you money for many years.

Make the most of your energy saving investments by choosing eco shower heads and eco taps. If you want to keep your current taps, simply fix tap aerators to reduce water use by up to half. If you are on a water meter, you should make great, immediate savings as these quality products reduce consumption by more than 50%. This also has a knock-on effect with your energy bills, as you need to heat much less water.

We’re here to help you take control of your spiralling energy and water bills. Call our expert team on 0845 123 5464.