Politics

Experts warn UK could face ‘a year and a half of struggle and high costs’



P

eople in the UK could face “at least a year and a half of struggle and high costs” as the energy crisis continues, experts have warned.

Holyrood’s Net Zero, Energy and Transport Committee heard evidence on the country’s soaring energy prices from Dr Matthew Hannon, Tim Lord and Dr Richard Lowes on Tuesday.

Dr Lowes, senior associate at The Regulatory Assistance Project, said people “haven’t started feeling the pinch yet”, adding there is unlikely to be any “let up” before 2023.

Dr Hannon, from Strathclyde University’s Hunter Centre for Entrepreneurship, warned that the energy price cap could rise again in October – with the average electricity and gas bill paid by direct debit forecast to go from “just shy of £2,000 to roughly £2,600”.

He told the committee that people in the UK should “brace themselves for record energy prices”.

Households could be set to face further energy price hikes later in the year, according to forecasts (Andrew Matthews/PA) / PA Wire

Dr Hannon added: “There’s probably two key factors which I expect will start to set the scene for whether we see bills starting to drop.

“That’s the extent to how quickly we start to decouple our energy consumption from gas – that’s both for power generation and also for heat – and I think associated with that is some of the difficulties with decoupling wholesale electricity prices from gas more broadly.

“So even if we aren’t consuming much gas, the price of gas will dictate, to a large extent, the price of electricity.

“I think the other key factor here is the extent to which we can drive forward on energy efficiency.”

If there’s only one thin silver lining around what’s happening at the moment, it’s that the things you need to do for net zero are exactly the same things that you want to do in order to achieve those objectives

However, Mr Lord – head of climate change for Phoenix Group and associate senior fellow for net zero at the Institute for Global Change – said he would be “cautious” in making forecasts, highlighting that unforeseen factors including demand during post-Covid recovery and supply shocks resulting from the war in Ukraine are impacting on the crisis.

Dr Hannon said there are two objectives – aside from reducing emissions – in creating policy responses to the energy crisis.

These, he said, are reducing the overall cost for efficient systems, and identifying who in society will pay in the most fair way for a just transition.

Mr Lord added: “If there’s only one thin silver lining around what’s happening at the moment, it’s that the things you need to do for net zero are exactly the same things that you want to do in order to achieve those objectives in the context of this energy crisis.”

The panel said more funding needs to be available to help households in affording their bills (Martin Keene/PA) / PA Wire

In order to mitigate the problems being faced currently by households across the UK, the panel said market reform is necessary – with a not-for-profit model being suggested as an ideal strategy in order to help communities with funding towards net zero targets.

The experts told the committee that in the short-term, the state “needs to step in” to support households with funding – and said those who would have been able to invest in retrofitting their homes to reduce energy costs before the price hike should be given particular focus.

Dr Hannon said: “We can’t forget the people in the middle who are somewhere in between not fuel poor, but they’re also feeling the pinch to the extent where they’re wanting to make efficiency measures.”

Dr Lowes also suggested much planning regulation at building level “needs to be ripped up” if we are to reach net zero targets, such as rules limiting aspects like double-glazing for windows in order to protect heritage instead of providing insulation.



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