How Long are Energy Prices Likely to Rise?

The UK energy crisis couldn’t have come at a worse time. Inflation is at an all-time high, the cost of living continues to increase the sharp increase in energy bills has left both households and businesses concerned about how to cover the cost. Many are now faced with more than a 50% increase in energy bills.

There are many complex reasons for this. Globally, we’ve seen an increase in energy prices due to geopolitical and economic concerns. Then we have the pressures of COVID and the staggering 54% increase in the UK energy price cap announced in April this year.

Because of this, around 22 million customers in the UK saw their energy bills increase by between £693 and £708 per year.

In this article, we will explain why energy prices have risen so steeply in the UK and whether they are likely to decrease in 2023. We’ll also look at what the government is doing to help the people of Britain and what you can do to reduce your energy prices.

Energy bills could continue to rise in 2023

We’ve already seen significant increases in our energy bills thanks to the increase in the energy price cap and the current war in Ukraine looks set to continue. This means that prices for 2023 could be concerning.

According to analysts at Cornwall Insight, prices of energy are likely to drop eventually. However, the immediate forecast is bleak.

The price cap is predicted to increase by a further 32% in October 2022 and place a further strain on the household and business energy budgets around the UK. If this happens, energy prices could potentially double within just 12 months.

Why are energy prices rising?

UK energy prices are rising due to the record highs in wholesale market prices. This is driven by many factors.

During the COVID lockdowns, we were forced to stay at home, increasing our overall energy consumption, placing additional strain on suppliers and pushing up demand. This in itself lead to higher wholesale energy prices that were passed on to consumers.

Then came the war in Ukraine which disrupted global energy supplies. Additionally, much of our energy still comes from fossil fuels which are a limited resource. Again, this increases demand and pushes up prices.

The war in Ukraine

Russia is the world’s second-largest supplier of gas, supplying most of Europe. Britain gets its supply from its own fields in the North Sea, Norway, Qatar and the US. But as the EU turns away from Russia in response to the war, extra strain is placed on our own supply here in the UK.

Fossil fuels

Oil, gas and coal are fossil fuels that are currently used to produce the majority of energy in the UK. As you might know, these supplies are finite- when they are gone, they are gone and we need to turn to other energy sources such as renewables to meet the demands of homes and businesses across the world.

As supplies decrease, this has a knock-on effect on the price, increasing it significantly.

Is the government doing anything to help?

Despite this apparent bad news, there is hope on the horizon.

The UK government has announced it will continue capping household energy bills to help protect millions of struggling households. This was originally due to expire in 2023. Although this won’t counteract the price hikes completely, it will help ease the financial pressure.

Additionally, a new energy bill was recently announced in the Queen’s speech to help us reduce our dependence on gas and support low-carbon energy systems. This includes an increase in investment in energy-efficient heating that hopes to both cut costs and reduce emissions, and business rates relief for low-carbon heat networks.

How can we reduce energy costs?

If you’re concerned about your rising energy costs, there are many things you can do to ease the strain:

1. Consider changing your tariff

Although energy prices have increased across the board, it’s worth doing some research to find out whether you could switch suppliers or tariffs to save money. However, if you’re on a standard variable rate, you’re unlikely to find a better option. It’s always worth a try!

2. Find out about financial hardship funds

Did you know that several energy suppliers have funds that can help support struggling households? Check whether yours can offer any additional help.

3. Become more energy aware

Use less energy and you can significantly reduce your energy bills without too much effort. Simple changes such as switching off lights when you leave a room, installing LED lights and unplugging your appliances when not in use can make a big difference.

Get an EPC and you could identify which changes you need to make.

4. Switch to renewables

If you’re eco-minded, you could consider installing renewable energy sources in your home such as solar panels or wind turbines. These allow you to generate your own energy and potentially sell it back to the grid.

UK energy prices have increased significantly over the past few years due to factors such as decreasing supply, increased demand and the pressures of the war in Ukraine. But by checking your tariff, looking into hardship funds, getting an EPC, switching to renewables and getting energy-savvy, you could reduce the impact it has on your budget.

Need help? Contact us today for your EPC or commercial energy audit today.