As we head through the new millennium, it is becoming more apparent that utilities prices are consistently heading just one way, up. With speculation of power-shortages and attempts by the UK Government to regulate energy tariffs, we take a look at how the energy market has changed and where industry experts believe that it is headed.

“Households are being hit by annual increases of £100 in their energy bills.”
 Ofgem, 2013

The figures confirmed by the Office of Gas and Electricity Markets (Ofgem), certainly make for interesting reading. With stark differences between the regular 30% annual increases in energy prices and the average annual wage increasing by just 1.4% industry professionals, homeowners and businesses alike are concerned that utilities bills could soon consume much of their capital.

The effects of difficulties in meeting the high tariffs can already been seen across the UK, with research by comparison site uSwitch indicating that over 5 million UK households now owe money on their energy bills, compared to 4 million households in 2012; a trend which seems to be correlational to the increasing rates.

Whilst the Government has taken recent steps to regulate the utilities market, by ordering the ‘Big Six’ to be more transparent about their packages and offerings they hope to ensure that customers get the best possible deal. To date there are no clear conclusions from this Government action, which means that consumers are often left short-changed.

 

But why are my energy bills rising?
Whilst the more obvious reasons for increases are THE rising commodity costs of electricity and gas, there are certainly other elements for consideration…

• A sharp fall in the UK's power production capacity
Ofgem predict that the decrease in UK energy sources has already contributed to rising fuel bills and is concerned that as more aged power stations close, the UK will have no choice but to fill this shortfall with imported energy from around the globe. This is likely to cost the energy firms and consumer more due to fluctuations in energy tariffs around the world.

• An ageing network of energy production facilities
As power stations near the end of their lives, they are not able to fulfil their full capacity and are closing at a rapid rate. These closures across the UK do not correlate with the rate at which new measures are being installed, resulting in short fall in supply. This has led to the need to source more expensive power sources elsewhere; pushing the bills up.

• Increase in general costs
The energy cost increase is broken down into two key areas; wholesale rises and introduction of renewable measures. Whilst there are many negative media reports portraying the introduction of renewable energy measures as the biggest constraint, it is actually the case that these contribute just 16% to the increases. The remaining 84% is solely influenced by increases in commodity and supplier costs.

 

So, what is next?
With bills continuing to rise the Government, energy companies, regulators and even us as consumers need to take action; with renewable energy and energy efficiency offering the best long-term solution to the UK market.

• Increased energy efficiency measures
As emphasised by Ofgem’s Chief Executive, it is vitally important to resolve the issue of ‘leaky homes’. With energy inefficient buildings we are contributing to an energy crisis, in which we are wasting the energy which we have created through loss & over-use. This must be addressed to ensure that we make the most of the resources available to us.

• Investment in stronger UK energy supplies
Decreases in UK based energy have resulted in price wars with other countries, which further emphasise the need for the UK to invest money in new energy generation methods. This is a measure which is recognised and embraced by the ‘Big Six’, who are particularly happy to implement new sustainable methods. Again, it is a widely held consumer belief that renewable investment and backing has a strong impact on electricity bills, where the reality is that ‘The Renewables Obligation’ and ‘Feed-in Tariffs’ scheme cost just £22 annually for bill payers to support; a minor amount to ensure that the lights stay on in the future.

• Reforms to the electricity market through the Energy Bill
The Energy Bill, which is due in autumn 2013 aims to level the playing field in the electricity market and provide consumers with sustainable, reliable and affordable energy options into the future. The bill is set to make provisions for the decarbonisation targets to encourage low carbon electricity generation, using methods such as renewable energy.

 

Renewable energy can lower our bills in the long-term
Whilst there is no doubt about the fact that investment in energy generation, of any type, carries a cost to the consumer; investment in renewable energy generation can provide stable and secure access to energy into the future. Investment in renewables will reduce that amount of fuel which we currently import from outside the UK, whilst providing a consistent energy supply and production, using an energy source which is not subject to the market and supply pressures of other energy.

It may come as a surprise to you that in a recent survey carried out by Cardiff University, researchers found that members of the general public are supportive of investment in ‘clean energy’, as they believe that this can provide more reliability into the future. With over 80% of those surveyed worried about the use of fossil fuel important dependency and an encouraging 85% supportive of power generation from the sun, followed by 75% in support of wind energy.

The figures may seem unexpected, but as the negative media storm brewing over the future of reliable energy and sustainable sources, is would appear that the public are warming to the idea of greener energy as a safe bet for their future energy needs and that of successive generations.

For more information on making your building more energy efficient to beat the rising bills, call us on 01562 745 265 or email enquiries@eco2-energy.co.uk