The energy crisis has been plaguing the news, and our minds, since last year. With the average UK household set to pay a whopping extra 54% for their energy in April, it’s not exactly giving us that warm, fuzzy feeling.
However, just because the prices are increasing, doesn’t mean there’s nothing we can do to blunt the impact when it hits. We’re going to be taking a look at some ways you can better weather the storm, but first, it’s a good idea to understand why there is an energy crisis in the first place, and why it’s affecting you.
How did the energy crisis start?
When the world went into lockdown in 2020, energy usage increased dramatically and depleted gas stocks at a higher rate than usual. After the especially cold winter going into 2021, stocks were dwindling. The UK doesn’t have the landmass required to harbour vast amounts of reserves. Our gas storage only accounts for about 1% of the entirety of Europe. That means when there is a spike in demand, it’s a rush to get more gas in to keep the supply running smoothly.
You’re probably asking why after the world came out of lockdown, didn’t we return to normal levels? It’s because the entire world was scrambling to get back on its feet. Economies needed to recover, and countries competed heavily for the energy required to bounce back. Some countries like China have seen massive growth due to this effort. With the world demanding more energy than usual, and at the same time, costs have soared.
Another element is that we haven’t completed the transition into eco-friendly energy supplies, and the ones we have aren’t always flawless. Half of our energy still comes from carbon-based fuels, which were heavily in demand last year. Althemore, wind technology, which accounts for 20% of the UK’s power, hasn’t been perfected yet and even then has its limits. We’ve experienced both calm and extreme weather recently. Opposite ends of the spectrum that turbines don’t perform well in. Again, this puts a higher demand on carbon-based fuels, meaning higher costs.
The energy price cap
You might have heard that energy suppliers are going out of business, but why, and how does it affect you? All these so far mentioned elements compound into higher prices suppliers have to pay for the energy that, in turn, they sell to us.
In 2017, an energy price cap was introduced that meant suppliers couldn’t charge more than a stated level. This was designed to protect consumers from ever-increasing energy costs. The years since then have been somewhat turbulent, to say the least, however, and the world is now paying more for energy. UK suppliers aren’t able to charge more than the price cap; therefore, they’ve been selling energy for less than they’ve been purchasing it. Anyone can see that isn’t a sustainable model, but it was one they were forced into due to unfortunate circumstances.
The 2022 energy cap increase
Ofgem, the UK’s energy authority, regulates the price cap every six months. Back in October of 2021, standard tariffs were increased by £139 per household. This increased the price the average consumer pays to £1,309 per year.
To try and avert a larger crisis of more suppliers going bust and leaving households without an energy supplier, Ofgem is going to increase prices again in April 2022. This increase is a staggering 54%, raising the average to £1,971. This massive increase demonstrates how much trouble the UK’s energy suppliers are in, but that does little to calm the nerves of many who might already be struggling to make ends meet.
With the war in Ukraine raging and Russia becoming the most heavily sanctioned nation in just over a week, the world watches on to see what Russia or the West do next.
One question comes into play, and that’s what to do about Russian oil imports? Providing about 10% of the globe’s supply, some countries rely on that constant stream to keep their own economy ticking. Fortunately, the UK is not one of those countries, with plans to phase out Russian oil entirely by 2023, and not be dependent on Russian gas either, which only makes up 4% of our supply.
So, we’re not in a tight spot regarding Russian imports, but other countries are and that might have knock-on effects on our supply. It’s now become a question of morality vs practicality for some nations on whether they should continue to import Russian fuels. Some nations in Europe rely heavily on these imports, and if they plan to get rid of Russian fuel, they will need to get it from somewhere else. That could possibly mean increased demand on our suppliers, and therefore increased costs for the UK.
What can I do to save money?
So far it seems that there’s no way out of this spiral, and it would be untruthful to say there’s a surefire way to make sure you don’t get affected at all by the current rising costs. That doesn’t mean that there aren’t ways that you cushion the impact, though, and we’re going to show you various ways to save that will help, even if just a bit.
As we progress into an increasingly modern world, things like tracking your home’s energy usage are becoming easier and more affordable. Smart thermostats aren’t the answer to all your usage concerns, but they can certainly do their part in saving you money over the long term. Saving an average of 11% on heating costs, they are one of those appliances that save you money the sooner you buy them.
Price and features vary, but no matter which you get, it’ll save you money in the background. Most hook up to an app on your phone and will remind you to turn off the heating remotely, or even do it by itself when you’re out. Multi-zones are also more common, which means that if you generally spend more time downstairs in the evening, then you can have the upstairs heating turned off until you’re ready to go to bed.
If you’re interested in getting a smart thermostat, you should at the very least ask your energy supplier if they provide them, as it could save you on the initial cost.
Getting to know your energy usage
It might sound obvious that if you turn down your heating, you will save your cash. What might not be obvious is that by turning it down by only 1°C you could save around £80, and 16TWh.
What’s more is that filling your kettle up to only the required level might save 1TWh, while washing clothes at 40°C or less might only save 0.4TWh.
How can you do this? An easy way to get a general idea of your electricity usage is by getting an electric usage monitor. these handheld gizmos allow you to track usage in real-time, meaning you can optimise your power usage. By familiarising yourself with your home’s energy use, it means that you could be pulling savings almost out of thin air and have a better understanding of your energy use in general. The bottom line is that knowledge is power, excuse the pun.
While it’s likely that you already have some of these in your house, it’s unlikely you know how much you could be saving if you replaced all of your bulbs with energy-efficient ones.
One 40W energy-efficient bulb saves an average of £10 a year over a standard bulb, based on a time of 4.5 hours a day. Even if you just replace the lights you use most, you’ll be saving over the long term. They also last 25% longer than standard bulbs, meaning you’ll buy them less often.
Replace appliances with efficient ones
Appliances are without a doubt one of the biggest factors in your energy bills. If you have an old fridge, dishwasher, clothes dryer or any other common appliance, it’s worth replacing them with energy-efficient ones that will cost you less in the long run.
Appliances are generally rated A to G in terms of their efficiency, with A-rated goods on average saving over £100 a year for the average household. If you have more than one energy-efficient appliance, they could save you hundreds over their usually decade-long lifetime. Even replacing just one appliance will have a marked change in your energy bills.
Don't leave it on standby
If you’re looking to save money, then leaving appliances on standby is the last thing you want to do. by simply turning off at the wall, or unplugging electrics that aren’t in use, you can save around £35 a year. While things like speakers or computers might not drain much power when not in use, it accumulates over time. The more things you have idly running in the background, the more it costs you in electricity usage. Count this to the growing list of things you can do to save on energy, and it’s a welcome addition.
Low-carbon heating system
The UK Government plans to phase out fossil fuel heating systems altogether, and this starts with a ban on any gas and oil boilers in new homes after 2025. It’s becoming more common to see alternate heating systems, such as heat pumps installed in new and old homes alike.
It might be a great idea to get ahead of the curve and reduce your gas or oil intake by simply not having a carbon fuel boiler. Heat pumps work by capturing heat outside your home and moving it inside, and the heat gathered is considerably more than the electricity used to power the pump.
Heat pumps are suitable for almost any home, and tens of thousands have already been installed across the UK. It seems that these are going to be one of the most common ways to heat a home in the coming decades.
An energy-efficient boiler
A completely new heating system might not be viable for you at the moment, or perhaps you’re just in the market for a new boiler. New boilers can reach past 90% efficiency, while older models can be as low as 60%. In fact, over 50% of your annual energy costs come from heating alone, so if your boiler is starting to become dated it might be a good idea to invest in a new one. Once again, this is something that can save you close to £150 a year depending on what model you get. To find out more about the most energy-efficient boilers for 2022, check out our blog! We’ve also put together a checklist to maximise the efficiency of your boiler, don’t forget to read that too.