The reason behind the energy crisis
It is one of the important topics of news right now but?what is?the UK energy crisis and how does it impact our homes? We're already seeing how the market price of natural gas is playing chaos with our bills. In January 2021 natural gas was around 50p a therm. By October 2021 it was ï¿¡2.50 a therm before rocketing to ï¿¡4.50 just before Christmas.?
The energy crisis has left households facing steeper gas and?electricity bill with many paying as much as 50% more for energy.
This caused?Ofgem?to raise the?energy price cap?- that limits what suppliers can charge customers for their gas and electricity - in October 2021 from ï¿¡1,223 to ï¿¡1,370. As some suppliers struggled with the price rises - essentially having to pay more for gas than they were able to charge their customers - almost 30 energy firms have since gone bust.
The price cap rose again in February to ï¿¡1,900 for average users, according to analyst Cornwall Insight. This increase is now in effect. As the cap is reviewed every six months, the price cap will then likely increase again in October 2022 by an estimated 32%.
Amid the problem is Britain’s increased reliance on imported energy and lack of energy storage.?
UK import over half the gas we use, so we are directly and immediately exposed to fluctuations in prices. And, while this is true the world over, in the UK we’re short of energy storage facilities at the best of times.
The loss of the rough energy storage facility off the Yorkshire coast when it closed in 2017 was significant. The Centrica-owned service provided 70% of the UK gas storage capability for more than 30 years.?
The continued reduction in supply from Russia is an important factor too. In January this year, Russia provided just 40% of the natural gas they supplied in January 2021. This huge hole in supply has led to consumers across Europe seeking alternatives. This pushes up demand and, naturally, prices.
Who's to blame for the UK's energy crisis?
Over the past decade, the UK government has failed to invest in insulation, despite calls from environmental and fuel poverty groups.
87% of UK households rely on gas. Such overreliance means we’re particularly vulnerable to changes in global prices, and that vulnerability is deepened by the fact our houses are poorly insulated compared to those in other European countries.
For decades successive governments, including this one, have missed opportunities to invest sufficiently in renewable energy. Had they prioritised clean energy and home insulation, the demand for gas to heat homes would be much lower and we’d be less exposed to current prices hikes.
The impact will be devastating, as more people face the choice of either buying food or heating their home. What’s more, with price hikes expected to remain until next winter, health inequalities will widen as households are forced to keep heating switched off. The elderly and clinically vulnerable are most at risk, as colder homes can lead to:
- a higher chance of getting a respiratory infection and bronchitis
- stress on the cardiovascular system
- making asthma symptoms worse, or causing asthma to develop
- an increased risk of mental health problems.
No one should have to prioritise eating or heating, particularly when oil and gas giants are reporting their biggest profits in years. Urgent support is needed to help those most at risk.
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Can renewable and nuclear energy be answer?
?While countries worldwide are committed to reducing their carbon emissions and investing in renewable energy, it is not yet available in sufficient guaranteed quantities to remove the need for fossil fuels.
Introducing renewables in the energy mix led the UK to wind down its tapping of the North Sea reserves for gas on demand. A previous back-up to avoid investing in expensive storage.?
Nuclear power remains controversial and hugely expensive in terms of initial and ongoing investment. 'It too isn't ready or able to step up to the plate in terms of supply. However Nuclear energy is one of the energy technologies that can supply baseload power like fossil fuel. This basically means nuclear power plants are producing maximum power more than 92% of the time during the year. That's about nearly 2 times more as natural gas and coal units, and almost 3 times or more reliable than wind and solar plants. It also has one of the smallest carbon footprints. It's one of the answers to the energy gap. It's essential to our response to climate change and greenhouse gas emissions. Reliable and cost-effective.
What does the energy crisis mean for our homes?
In addition to rising bills there will be requirements to 'decarbonise' our properties by phasing out gas boilers and improving insulation.
The government has pledged to ban gas boilers by 2035?with households already being encouraged to install?heat pumps an eco-alternative to heating our homes, with the Boiler Upgrade scheme. The scheme, available from April 2022 offers homeowners upfront payments of ï¿¡5,000 to install an eco-heat pump.
Next time your boiler breaks down, it’ll be worth considering this incentive to buy an eco-friendly heat pump.
There'll be grants and incentives to help, but one way or another, energy is going to remain a financial hot potato long into the future.
Philip Kyeremanteng
Environment, Sustainability and Nuclear Energy
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