Energy costs are again front and centre for consumers and business owners in the UK. Gas prices have doubled since the conflict in the middle east started at the end of February. Cornwall insights predicts the typical annual bill will increase by around 20% when the next price cap is set by Ofgem in July.
It is a misconception that going fully electric insulates you from the gas and oil market. Gas remains a significant part of the UK’s generation mix, and therefore the prices are tethered to these spikes. Estimates suggest electricity rates will rise from 24.67p to 27.44p per kWh, meaning you’ll be affected whether you’re gas reliant or fully electrified. How do consumers protect themselves from the market which is impacted by events thousands of miles away?
We don’t know how long the current conflict will last or if the impacts could increase in magnitude or peter out. We do know that being less affected by changes in the markets is good and provides you with a degree of control.
I suggest tackling this challenge with a three-pronged stick:
- Reduce your energy demands
- Free electricity is best electricity
- Effective cost over capped cost
Reduce your energy demands
This isn’t novel, but it remains key to driving down the amount you pay in bills – use the least amount of electricity (or gas) that you can. You do this in two main ways:
- Reduce your building demand
- Ensure your building is insulated to a good degree
- Use low energy lighting
- Upgrade windows to double/triple glazing
- Increase your building efficiency
- Reduce flow temperatures (whether gas or heat pump) through radiators or underfloor heating
- Install a heat pump (three to four times more efficient than a gas boiler)
- Install MVHR to recover heat before it leaves the building
The less electricity or gas you buy, the less you’ll feel the pinch from higher costs!
Free electricity is the best electricity
Solar PV arrays produce electricity at no cost from the sun. When we see higher electricity costs, the time required for the panels to pay themselves back reduces (assuming install costs don’t also increase).
If you have the option to install solar PV, my recommendation wholeheartedly would be to do so – it is a no brainer and you’ll benefit for up to 25 years. There are lots of options these days for arrays – pitched roof, flat roof, on ground – so it could well be possible for you.
Effective cost over cost cap
The final spike on our bills beating stick looks at smart ways to use variable tariffs to change the price you pay the electricity you use.
Most people view the price cap as a fixed reality. But, if we can embed flexibility (decoupling when you use electricity from when you pay for it) you can shift focus from fixed capped cost to effective cost.
Variable tariffs offered by utility companies have different prices for electricity depending on when you purchase the electricity. They do this to encourage consumers to use less when there is very high demand on the grid (usually 4-7pm), and to increase usage when there is a lot of supply but not much demand (overnight). Without flexibility, these tariffs can be risky, but with it you have the option to drastically bring down what you pay for your heating.
The easiest option is to store the energy as electricity. Think of a battery as a “time machine” for your money. It allows you to:
- Buy low – charge from the grid when prices are at their lowest (or when your solar panels are soaking up the sun).
- Use high – discharge that stored energy to run your heat pump and appliances during the expensive peak hours.
By doing this, the effective cost of the electricity your heat pump uses is significantly lower than the headline rate. Even if the price cap rises to 28p, your battery ensures you are mostly using power bought at a reduced rate or generated for free.
If a battery feels like a leap too far, you can store that “cheap” energy as heat.
- Smart thermal storage -units like the Zeb function like a high-tech storage heater, “charging” when rates are low and releasing heat when needed.
- The route one approach – increasing the size of your hot water cylinder. By overheating your water during off-peak hours, you are essentially using your tank as a thermal battery, bypassing the need to run the heat pump when the grid is under pressure.
While storing heat is an ok move, storing electricity remains the best for flexibility. A battery doesn’t just feed your radiators; it feeds your lights, your oven, and your car.
How to approach
The best way to deal with higher energy costs is to design a building which doesn’t care about them. An integrated system which is flexible will reduce any pain felt and deliver a comfortable environment for all who are in it!
If planning a renovation or new build, follow the following three steps:
- Design for low flow temperatures – it’ll increase the efficiency of your heat pump and reduce your electricity consumption
- Maximise PV – if you have the roof space, use it. The additional cost of putting 4 more panels on the roof is small compared to the energy they provide over 25 years
- Install a battery – easy and effective way to avoid peak electricity costs
Energy security doesn’t come from volatile markets, but in a building with flexibility embedded in the design.
