Why utility bills are set to rise in 2021

Why utility bills are set to rise in 2021

Getting your latest electricity bill is rarely a fun experience, yet it seems to become even more painful. The national grid has undergone a huge transformation in the past decade from coal-heavy to embracing wind and solar power, the costs of which have crashed. So there’s a logical disconnect – why are electricity prices rising if renewables are getting cheaper?

Energy bills can be one of the biggest monthly outlays in any household. And with millions of us now at home a lot more during, the day, we’re all using a lot more electricity – from powering up our work computers to making every meal from scratch. Energy prices are said to rise for an estimated 15 million UK households from April, just as the coronavirus furlough scheme comes to an end, likely placing households under even greater stress.

What causes energy price rises?

If renewable costs have fallen dramatically over the last decade (to the point they’re now cheaper than fossil fuels), why have electricity bills continued to rise?

There are several theories on what factors cause suppliers’ gas and electricity prices to go up or down.

Market forces can cause the wholesale price of gas to rise or fall which then has a knock-on effect on energy bills. However, wholesale gas prices aren’t always the cause of energy price changes.

The energy price cap: In recent years, the most significant gas and electricity price rises and cuts have been in reaction to changes in Ofgem’s energy price cap.
Limited supply: Gas is pumped out of the ground and electricity is mostly generated using a mix of fossil fuels like oil, gas, and coal. These are all-natural supplies, which are costly to get hold of, and more importantly, in limited supply.
Global conflicts: Wars in oil-rich countries and conflicts between countries over gas pipelines can impact wholesale prices. For example, wholesale gas prices in the UK have spiked when supplies in Ukraine, Iraq, and Syria have been threatened in recent years.
UK energy providers: There are some arguments that energy providers could afford to keep prices low but instead choose to maximize profits by raising prices. However, the industry regulator Ofgem aims to provide transparency in the way the sector prices its gas and electricity. Ofgem also aims to keep the market competitive to ensure that consumers get the fairest price possible.

How can you protect yourself against rising electricity prices?

So how can you insulate yourself from further price hikes? The simplest ( and greenest ) way is by investing in Solar Pv and battery storage. Effectively, you’re buying 25+ years of electricity upfront at a fixed cost. The lifetime cost of solar energy currently works out at 8p/kWh – far lower than the 16far lower than the 16p/kWh average for the grid, which as we’ve seen is going up and up and up…

SOLAR-PANELS-AUTUMN-MAINTENANCE-SOLAR-POWER-NI

Other top tips to help reduce your energy bills:

Consider switching to another energy supplier
Cook your meals in batches and freeze them
Wait until you have a full load before doing a load of laundry
Air dry your clothes rather than using your tumble dryer
Choose energy-efficient machines when you have to replace appliances.
Bleed your radiators regularly to ensure your heating is working efficiently.
Consider switching to renewable energy such as Solar Energy

To find out more about Solar PV, please give us a call on 028 207 88530

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