- Energy price cap set to rise in January
- ITV show looks at how homeowners can cut their energy bills
- Making incremental changes can make a difference in the short term
- Investing in LCT can protect you in the long term
The Eco Experts’ Maximilian Schwerdtfeger appeared on ITV primetime this week that looked at why our energy bills are so expensive, and what households should be doing to spend less each month.
Watch the whole programme Tonight: Energy bills – can you spend less?’ here.
Energy bills are a big worry for a good chunk of the UK’s 28 million households, and with the Energy Price Cap (EPC) predicted to rise to £1,736 per household between January and March 2025, a rise from £1,717, it’s not something that’s going away anytime soon.
However, it is possible to spend less by making gradual but immediate savings around your home and also to protect your wallet from rise and fall of global energy prices by investing in low carbon technology, such as solar panels and heat pumps and insulating your home.
Why are our energy bills so expensive?
The biggest answer is the wholesale cost of electricity and gas, which can account for at least one-third of the price of energy bills and which rose by 500% between August 2021 and August 2022.
“Our energy bills have gone up for a number of reasons, largely because the wholesale price of electricity and gas have gone up,” Schwerdtfeger said.
This rise in wholesale prices is the main cause of the ‘energy crisis’. This is largely considered to have begun in the summer of 2021, as economies started to open up after Covid-19 pandemic lockdowns. It has since been exacerbated by Russia’s invasion of Ukraine in February 2022.
The EPC, introduced by Ofgem in 2019 to protect households from the very worst instability in the energy market, rose by 12% in October in 2021 to £1,277 and then by a staggering 80% a year later to £3,549.
Energy bills fell in 2023, thanks to some government initiatives, a milder winter, strong winds and, most importantly of all, a slump in the wholesale price, which was driven by the UK and many other European countries becoming less dependent on importing gas from Russia.
The impact of the pandemic, the wholesale price and the war in Ukraine is clear, as gas prices had remained stable in the years leading up to lockdown, with the average gas bill being £564 at the start of 2020, compared to just under £700 in 2014.
The opposite is true of electricity, where prices increased by 36% between 2010 and 2021 from £450 to £769.
Will my energy bills fall in 2025?
This is hard to answer, but right now it looks unlikely. Energy prices were a direct cause of inflation rising by 2.3% in October, and this is likely to mean a further increase in the EPC after the January 2025 hike of 1.2%.
Energy intelligence company Cornwall Insight predicted in October 2024 that the EPC would fall in January 2025, a forecast which has since proved to be incorrect, and has previously suggested that energy prices will remain flat until 2028, when they will decline.
Whether bills will come down will largely depend on the wholesale price of electricity and gas, but it could also be helped by the UK achieving energy independence through clean sources and LCT, which the government has made a priority.
There is very little way of accurately predicting when prices will fall and by how much, but in the meantime there are things you can do to protect your household.
“There are lots of things you can do around the house to cut your bills down almost immediately,” Schwerdtfeger said to ITV, pointing to small, everyday improvements families can make to lower costs.
“Be aware of where your energy is being wasted because if you do so it will be really worth it in the long run.”
What can I do to spend less on energy?
There are a number of things you can do to bring your energy bills down, with the first step being understanding where you’re wasting energy and where money can be saved straight away.
- Use an air-fryer – This could include using an air-fryer instead of an oven to cook your evening meal. An air-fryer uses 84% less electricity than an oven and you could save about £50 a year if you used one on a regular basis.
- Buy a smart plug – These can be used to better monitor your energy usage. You plug it in, connect to WiFi, attach a wired device and you can control them from your phone remotely. You can cut your energy usage by about £60 a year – but this depends heavily on your energy usage.
- Draught proofing – Draught proofing windows and doors can save around £40 a year and draughtproofing your chimney can save around £55. This can be as simple as using adhesive strips to fill the gap between windows and frame. It has been estimated in the past that as much as one-fifth of heating is lost due to draughty windows. Even using something as simple as a door snake can cut the air you lose through your door.
- LED lightbulbs – This is important because lighting accounts for about 15% of the average home’s electricity bill. If you replace a 50w halogen bulb with an LED equivalent, you can save about £75 in energy over the lifetime of that bulb. Replacing every bulb in your house could save as much as £40 a year.
- Insulation – This is a slightly bigger one because it costs a bit more to insulate your home than it does to buy LED bulbs, but it really is worth it as insulating your loft can save up to £200 a year.
- Be aware of Vampire Energy – This means turning off your appliances when you’re not using them, instead of leaving them on standby, otherwise you will waste money without even realising it. This could be your TV, laptop, cooker, printer, or anything that is plugged into a socket. Turning off your devices could save as much as £146 a year.
What can I do long term to cut energy bills?
This is a much simpler question, and the answer is invest in LCT, as these will future-proof your home against the rise and fall of wholesale prices.
Solar panels can cut your bills by anything between 50-70% a year and you can break even on your investment in just over 15 years; even if you sell your property, having solar panels installed on the roof can make you 2% more than if you didn’t have them.
With the Smart Export Guarantee, you’ll even be able to sell what excess solar energy you generate back to the National Grid, which will cut your payback period even further.
Heat pumps are also an incredibly efficient way to power your home in an eco-friendly way. While you won’t necessarily save money by replacing your gas boiler with a heat pump – electricity is currently four times more expensive than gas – when that changes you will be in a position to benefit.
You needn’t worry too much about the upfront cost of a heat pump as long as you apply for the Boiler Upgrade Scheme, a government grant which offers £7,500 for the cost of upgrading from a gas boiler.
Schwerdtfeger also recently appeared on the BBC’s Sunday Morning Live to discuss ways that people can cut their energy bills.
You can catch Max’s segment from 29.48 mins here.
