Britain is at risk of experiencing a repeat of the sharp increase in energy costs which has fuelled the continuing cost of living crisis because it relies too heavily on gas, according to an expert panel of industry leaders.
The Energy Crisis Commission has warned that the UK is still “dangerously underprepared” for another crisis because it continues to rely on gas for its power plants and home heating.
The newly formed commission, made up of representatives from business groups Energy UK and the CBI, and the consumer groups Citizens Advice and National Energy Action, used its first report to warn that too little progress has been made in insulating homes and scaling up the installation of heat pumps since the UK economy was rocked by record high gas prices.
The energy crisis began in late 2021 as rising gas prices led to 29 household suppliers failing and Russia’s full-scale invasion of Ukraine in early 2022 sent bills soaring, forcing the UK government to step in to subsidise bills.
Adam Scorer, the head of National Energy Action, a fuel poverty charity, said the “risk of future crises is real” and would “hit hardest those less able to withstand price shocks”.
The report found the crisis had a “catastrophic” impact on British households. Energy bill payers were hit harder than in many other European countries because the UK ranks as the second most dependent on gas for heating, and the fifth most dependent on gas for electricity, it said.
The report also took aim at the government’s “poorly targeted” support scheme which cost the exchequer more than £78bn, according to the Office for National Statistics, but left about 7.5m households in fuel poverty and bill payers in £3.5bn of debt to energy companies.
Gillian Cooper, an executive director at Citizens Advice, said: “Underpreparedness and missed opportunities helped drive the energy market crisis. Sluggish action on green upgrades, supplier failures, poor practices like forced prepayment meter installations, and inaction on targeted bill support has left millions of households feeling the devastating impacts of the crisis first-hand.”
David Laws, Energy UK’s chair and the chair of the commission, said: “The UK has experienced regular energy price shocks over the last 50 years, which have damaged economic growth and hit both households and businesses. Future oil and gas shocks seem inevitable, but the UK remains poorly prepared to absorb these.”
The commission called on the government to prioritise shifting the UK away from a reliance on gas to help protect households and the economy from future energy price shocks. It called for a rollout of energy efficiency measures, such as insulation and tougher efficiency standards in the private rental market, to help improve the UK’s draughty homes.
It also called for the government to set out a plan to move homes away from gas heating by rolling out more heat pumps or other low-carbon alternatives.
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The commission urged the government to continue its efforts to cut the UK’s reliance on gas power plants in favour of low-carbon electricity sources, and to help energy intensive businesses to switch to clean energy alternatives.
Louise Hellem, the CBI’s chief economist, said: “The energy crisis sent a shock wave through the economy that affected nearly every business in the UK, with industry, small businesses and high street firms particularly impacted … Addressing why the UK was particularly vulnerable to price spikes is vital not only to prevent serious consequences for consumers, but its impact on the wider economy.”
Ed Miliband,the secretary of state for energy security and net zero, said: “This report shows industry experts support making Britain a clean energy superpower, which is a core mission of this Labour government.
“After the Tories’ catastrophic failures, we have taken decisive action. We overturned the nine-year onshore wind ban within 72 hours, have overseen the most successful renewable auction in history, set up Great British Energy and taken action to lift 1 million renters out of fuel poverty with new energy efficiency standards.”
