Energy prices are rising again in the wake of the Iran conflict and the UK government faces a choice: subsidise household energy bills to relieve consumer pressure or use the unique opportunity presented by an energy crisis as a catalyst to implement lasting change in our energy system.
This summer is a unique window to drive a major push on energy efficiency and electrification, but only if political will is there. Failing to seize it would be a missed opportunity to permanently free British homes from the volatility of global gas prices [1].
Another crisis is predictable
In the 2022 crisis, the £37 billion Energy Price Guarantee softened the blow of the energy crisis, allowing households to get through a period where their bills rose by around £2,000. But the Guarantee was a blunt instrument that did not help the underlying problem of our reliance on volatile global gas markets. The result was that British households remained just as exposed to the next shock, which we are now experiencing.
Now, disruptions in the Strait of Hormuz have triggered another wholesale price surge, with long-term economic consequences expected beyond the potential end of the Iran war [2]. This is not a temporary spike, but a predictable, recurring result of an economy built on volatile global gas markets.
Electrification is critical
The UK government has already taken some positive action to ease the impact of the energy crisis, including initiatives to accelerate the Warm Homes Plan, bring plug-in solar to the market, boost the social housing decarbonisation fund by £100m and uplift the Boiler Upgrade Scheme grant for oil heating households [3]. Helping households get off fossil fuels - by getting more heat pumps, solar panels, batteries and electric vehicles in homes - will benefit the UK’s long-term energy security.
However, these structural shifts take time to deliver widespread consumer benefits, so an immediate demand-side intervention – that helps moderate households energy demand – is also needed before winter arrives.
An energy efficiency push
Alongside targeted support to vulnerable households that need it most, one way the government could take action would be a robust energy efficiency and demand-shifting campaign. Summer is the ideal moment to act, so households can prepare ahead of the cold. A proactive strategy should focus on three clear pillars:
- Unified advice: Governments across the UK should be forthright in promoting these measures to households through all channels possible, launching a national public-information campaign leveraging trusted delivery partners, including local councils, charities, energy companies, and schools. Efficiency measures should be framed not as a compromise, but as a practical tool for household financial resilience. To prevent confusing or competing advice, governments could provide a centralised set of recommended measures, for example of the gov.uk site. This would champion zero-cost actions like lowering boiler flow temperatures to 60°C, which alone could save £1 billion collectively [4].
- Targeted incentives: The UK government should consider a range of additional short-term incentives for energy efficiency upgrades, this could include things like discounts on key low-cost materials and services, such as draught proofing, or expanding zero VAT to a wider range of energy saving measures.
- Demand shifting: Reduce peak gas reliance by promoting smart meter rollouts, extensive use of the Demand Flexibility Service and smart EV charging. Making live energy demand data transparent can encourage consumers to voluntarily shift consumption away from expensive peak hours, when gas is most likely to dictate electricity prices.
Energy efficiency and electrification together
Taking steps this summer on both energy efficiency measures and electrification will protect vulnerable families this winter, while securing the foundations to get Britain off gas for good. By using the window of opportunity of an energy crisis this time, the government can both help consumers reduce their bills and put in place reforms that will enable long-term electrification.
End notes:
[1] https://www.nesta.org.uk/report/how-to-respond-to-the-energy-crisis/
[2] https://www.bbc.co.uk/news/articles/cm29m98md2do
[3] https://www.gov.uk/government/news/government-to-go-further-and-faster-in-becoming-energy-secure
