“A pointless circularity of artificial taxation and support,” was how a group of Conservative MPs summed up environmental levies that support the green transition in a letter to the Telegraph last year. Soaring fuel poverty shows, however, that the UK cannot afford to miss out.
Government figures released today (28 February) show that 7.39 million households spent more than 10 per cent of their income (after housing costs) on domestic energy in 2022 – up from 4.93 million in the previous year. By next year 14.4 per cent of the population is expected to be in official fuel poverty. The clear solution, campaigners argue, is to reduce reliance on expensive fossil fuels. In early 2021 energy bills would have been £2.5bn lower, Carbon Brief calculated, if David Cameron’s government had not cut support for renewables and energy efficiency (and that was before the war in Ukraine pushed up the price of oil and gas further still).
Undoing this damage would involve a street-by-street expansion of energy-saving measures, NGOs such as Friends of the Earth and the End Fuel Poverty Coalition suggest. Households could then be weaned off fossil fuel dependency through financial support to replace boilers with heat pumps, while a rapid expansion of renewable energy would counteract the rising international price of gas. To help balance renewable power’s intermittent availability with the peaks and troughs of consumer demand, the National Grid has already launched a “demand flexibility service” that pays households to cut their energy use at certain times.
There are, of course, obstacles to such a shift. Too few households can afford the upfront costs of insulating their homes or installing heat pumps. There are not enough skilled installers. And money back for reducing consumption favours those with the technology, time and capacity to make the change, experts warn. “Too often innovation is taken with early adopters in mind, and risks leaving those who need the help behind,” Matt Copeland of National Energy Action told Spotlight. In other words, you cannot shift your energy use to a different time if you cannot afford to turn the heating on at all.
Social enterprises are showing how renewable energy can directly benefit society’s most vulnerable. By the end of 2023, for example, a scheme called EnergyCloud will use excess wind power to provide 10,000 Irish homes with hot water – for free.
Launched during the pandemic, the scheme works by installing a remote-controlled digital switch on a household’s hot water tank. Thanks to the combined efforts of the home technology company Climote, Clúid Housing Association and Wind Energy Ireland, every time a windy night releases a burst of power onto the Irish grid, EnergyCloud’s pilot scheme uses the digitally controlled hot water tanks to soak up excess wind energy that would otherwise have been lost. “We call the existing users ‘storm chasers’,” Derek Roddy, co-founder of Climote and EnergyCloud, said over the phone from Dublin, “they look forward to the next storm since they know it means low-cost energy.”
An estimated 750Gwh of potential energy was wasted in Ireland in 2021 due to lags in demand, and growth in UK renewable energy is predicted to mean that there is an excess of supply 53 per cent of the time by 2030. EnergyCloud offers hope that such challenges could be turned to consumers’ advantage. A new link up with Amazon Web Services, announced in February, will see 1,000 households provided with the free smart device by the end of March.
“EnergyCloud is a unique approach by stakeholders along the value stream,” said Roddy; the scheme has support from EirGrid, the national grid, energy companies such as SSE Airtricity, and more. “Yes, some of our stakeholders may feel a little less comfortable that this is not focused on generating profits for shareholders, but we are all in this together to see what we can do if we think differently.”
The way the scheme circumvents energy markets might make it difficult to replicate at scale, warns Louise Sunderland from the Regulatory Assistance Project, an energy policy NGO. “But they’ve proved a great concept, which is about finding as much value in renewables as we can and directing it to those who really need it.”
Other social enterprises are applying similar logic in different ways. In England the Brighton and Hove Energy Service Co-operative is providing a free consultancy to households on the best ways to improve energy efficiency and reduce energy costs. They also provide upfront financing via a community share offer, which provides investors with an annual interest payment. A portion of the bill savings are then used to repay the project’s costs.
Governments too must play a role. According to Dan Curtis, of the Brighton co-operative, there is an urgent need for all homes, not just private-rented ones, to be supported in meeting higher efficiency-band requirements. That means more financial support for energy efficiency measures and heat-pump installation, and more training for experts to fit them.
The electricity market itself needs to ensure cheaper energy for those who need it most. According to an upcoming report from the Common Wealth think tank, billions could be saved by tackling windfall profits in electricity generation. “Decoupling electricity prices from the price of gas is key to cutting energy prices,” Common Wealth’s Adam Peggs told Spotlight. Under the current wholesale market, the price of all electricity units is set by whatever source generates the last unit needed to meet demand, and that is almost always gas, rather than cheaper renewables.
All this and more will be needed if the UK’s green energy future is to be built on solid, socially minded foundations. But such an overhaul will also require public support. And it is here that schemes like EnergyCloud may play their greatest role yet.
“As a country we need to bring our citizens with us,” Roddy explained in regard to the rapid development of wind and solar farms needed to underpin the renewable transition. “And we’re going to get people wanting wind and solar farms in their area if they’ve already experienced the benefits of what that renewable energy can provide.”