3 Ways to Fix Energy in The UK
The UK’s overreliance on gas has contributed to the higher energy prices we are experiencing.
With low storage levels worsened by the closing of storage plants, the UK now relies heavily on European imports to keep up with its ever-increasing demand. On top of this, geopolitical tension in other parts of the world threaten to raise prices even more.
That’s why we’re going to take a look at a few ideas that could help make the energy market work for households – we’re not talking about turning thermostat down a degree, we’re on about real investment in areas that could reduce our reliance on gas and help everyone cut down on the amount of energy they use.
Where does the UK get its gas from?
The UK has been a big producer of gas since the mid-1960’s but its output has been slowly declining over the past 20 years. So far only about half of the UK’s natural gas is of domestic origin, coming from the North Sea and the East Irish Sea.
Usage and demand have continued to rise despite the fall in domestic supply, which has caused the UK to rely more heavily on imports. Now roughly 47% of the UK’s gas supply comes from countries across Europe, ranging from Russia, Belgium, Netherlands, and Norway, all using long-distance pipelines.
Roughly 9% of the UK’s gas is imported in the form of liquified natural gas from countries such as Qatar, US, and Trinidad and Tobago.
Why is this reliance on gas pushing up energy prices?
The UK’s dependence on using gas to heat homes and generate electricity has come at a huge cost, and this cost is expected to continue rising.
Being overly reliant on gas means the amount we pay to heat our homes is subject to current wholesale prices. With these rates being so high and unpredictable at the moment, and with the energy price cap preventing suppliers passing on these added costs to customers, it has spelled disaster for the UK energy industry. We saw this when just over the past few months, an unprecedented amount of energy suppliers went bust as a result of not being able to sell at a profit.
The bad news is not just limited to energy suppliers, as consumers are taking a hit as well. Even though the purpose of the energy price cap is to protect customers against rising energy prices, the cap is set to rise to record highs of £1,971, threatening the treble the number of those in fuel poverty in the UK. This has caused many to speculate whether energy efficiency should take priority over a price cap.
The problem is not just limited to wholesale prices, but also with storage. Due to the UKs insufficient and limited storage facilities, we do not have the ability to buy gas when the wholesale prices are cheap and store it. This has meant that the UK must constantly buy gas whenever supplies are running low at whatever the market rate is at the time – not ideal when the wholesale prices are this volatile.
And to top that all off, fears around potential conflict between Russia and Ukraine have caused energy prices to rise even further. The geopolitical tension could mean Russia may choose to limit, or cut off, gas supply to Europe – a disaster for the UK’s already low supply of gas.
The increase in energy prices and recent hit to household incomes has caused many to voice their concerns that the UK should move more urgently from is dependence on fossil fuels and over to more homegrown low-carbon energy sources.
How to fix the UK energy market
There are two major issues that are pushing up the energy usage and prices for households – the reliance on gas to heat homes and poor household insulation.
As mentioned, the UK has poor gas storages and so has been hit badly by the shortages in gas, with up to 85% of homes using gas as its central heating. This means a fair chunk of the UK’s central heating bill is dependent on the wholesale rate, which we know is rising rapidly right now.
The UK also has some of the oldest and most draughty homes in Europe. Old houses often mean poor insulation and the need for more energy to heat them. Therefore the reliance on gas to for central heating and the increase in energy prices spells disaster for the average UK household.
However, when there are problems there are always solutions! We’ve complied three energy efficient ways to help solve the problems outlined above.
The first solution is obvious, better insulation. Having better insulation means cheaper energy bills and lower carbon emissions. Losing heat simply because it cannot be retained in the house has forced millions to pay unnecessarily high energy bills for no good reason.
Research from the Energy and Climate Intelligence Unit, an independent advisory organisation in the UK, has found that homes with energy efficiency band D typically pay £630 extra in heating their homes under the current energy price cap. Those in band C typically pay just £100 less than this.
These findings have prompted many to urge the government to use public money to help make insulation more affordable. This should be a no-brainer for the government as it would make homes more habitable, cut energy usage and costs, as well as creating jobs. But it’s been five years since we first asked ‘Should energy efficiency take priority over a price cap?’ so we’re not holding our breath.
What are heat pumps you may ask? Heat pumps are an alternative to gas boilers. They work a bit like the reverse of a fridge – by transferring the heat from the air into fluid, then through a heat exchanger and into the heat pump. The heat is then used to warm up radiators and underfloor heating.
Getting away from gas and using other means to heat up your homes means your energy bills won’t be so dependent on wholesale gas prices.
Renewable electricity is electricity that has been produced in a sustainable and environmentally friendly manner. Traditional electricity usually comes from consuming fossil fuels; coal, oil and gas, which the world only has a finite amount of.
Here are a few ways in which renewable energy can be produced:
Solar – Solar power uses the heat of the sun to generate electricity through the use of solar panels.
Wind – Wind power uses the power of wind of wind to spin large wind turbines, in turn generating electricity in the same way a windmill works.
Hydro – Hydro power uses the moving water to generate electricity, similar to how wind is harnessed to generate electricity.
Biomass – Biomass energy converts organic material, such as plants wood and animal waste, into energy.
Geothermal – Geothermal energy using the heat from the earth to generate electricity.
These three steps are by no means a silver bullet to fix the energy market and are hugely dependent upon the government having the appetite to take us away from fossil fuels. But it’s time to forget price caps and bill reduction loans and put the infrastructure in place to really make a difference to how the UK generates and uses energy.
Click here to run an energy price comparison, and see if you could be paying less for your gas and electricity.