Gas will add £4,400 to the average household’s energy bills between the start of the gas crisis and the end of the current Energy Price Guarantee (EPG) in April 2024, according to new analysis by the Energy and Climate Intelligence Unit (ECIU).
Chancellor of the Exchequer Jeremy Hunt announced in his autumn statement that from April 2023, the EPG will make the average household pay £3,000, or £500 more than current levels of energy bills. That’s about three times the pre-crisis energy bill.
The analysis showed that the average household would pay £3,212 more due to the gas crisis, with the UK government paying the remaining £1,181 under the EPG.
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From the start of the crisis until the end of April 2024, high wholesale gas prices are expected to add £2,499 to gas bills, while the extra cost of running gas-fired power stations will add around £1,895 to average electricity bills.
Jess Ralston, senior analyst at the ECIU, said: “As the chancellor said, the gas crisis has cost the country the equivalent of a second NHS.
“With families struggling this winter and bills set to rise next year, it seems odd that Jeremy Hunt has even decided not to honor his manifesto commitment to insulated homes.
“Given the high cost of living, many households may lack the cash to pay for upgrades, exposing them and the country to volatile international gas markets.”
According to the ECIU’s Winter Power Tracker, so far this winter, renewable generation has effectively removed more than 27TWh of natural gas from needing to be flared at power stations. That’s equivalent to the gas needed to heat more than 2.9 million homes in winter or to power more than 30 LNG tankers.
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Recent government ‘contracts for difference’ auctions secured 11GW of new wind and solar at around a fifth of the current price of gas generation, including 7GW of offshore wind at a record low £45/MWh.
Renewables will repay £730m in the fourth quarter of 2022 as part of the CFD scheme. The savings would be even greater if onshore wind and solar were more fully deployed. Additionally, polls show that 77% of the public support wind and solar projects, even when proposed in their area.
Previous ECIU analysis has shown that installing insulation to meet the government’s target to bring as many households as possible to EPC C by 2035 would make imports more expensive than gas from “approved” North Sea fields between 2030 and 2035. Imports have tripled.
From April 2023, 8.6 million households are expected to be fuel poor, while the newly announced £6 billion in energy efficiency funding is not expected to be realized until 2025.
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Brendan Montague is the editor of The Ecologist. This article is based on a press release from the Energy and Climate Intelligence Unit.
