UK energy bills could be reduced to the tune of £700 per year by 2050 if net zero is reached, the Government’s official climate-change adviser has revealed.
Analysis by the Climate Change Committee (CCC) has found that a typical household’s bills could reduce significantly in the next 25 years if the Government follows its recommended route to reaching net-zero emissions.
The UK’s net-zero target would mean the country eliminating nearly all its greenhouse gas emissions by 2050 – with those that are generated being offset by removing the same volume of emissions already in the atmosphere.
For 2025, energy bills are predicted to be £1,650 for a typical semi-detached house, with a gas boiler and a petrol car.
According to the CCC’s analysis on how the UK can reach net zero, this would fall to £940 in 2050.
But before these lower energy bills can be achieved, the report cautions that millions of households will need to install heat pumps and improve the energy efficiency of our homes in the coming years.
This will cost an estimated £730 a year for a typical household, which the CCC says the Government will need to help with, through continued grants for heat pumps and insulation.
New policies to make electricity cheaper will also be necessary, the CCC warned in its Seventh Carbon Budget report.
“Depending on the level of policy support, a typical household will experience somewhere between £100 in savings to £150 in additional costs per year, on average, from 2025 to 2050,” the report concludes.
Where on that scale of savings and costs the average household ends up – and when – will partly depend on the number and value of grants available for heat pumps and for energy efficiency measures.
And it will partly depend on what, if anything, is done to reduce the level of levies on electricity bills.
These levies help fund new solar and wind farms and grants to improve energy efficiency and three quarters of them sit on electricity bills at the moment, compared to just a quarter on gas bills.
The levies could be moved off electricity charges and into a mixture of general taxation and gas bills, the CCC says – with gas making up an ever smaller proportion of the overall energy mix according to its analysis.
A £7,500 government grant is currently available to most heat pump buyers and the Government said recently this grant would continue to be available until at least the end of 2027.
Energy Secretary Ed Miliband said: “It is clear that the best route to making Britain energy secure, bringing down bills and creating jobs is by embracing the clean energy transition. This Government’s clean energy superpower mission is about doing so in a way that grows our economy and makes working people better off.
“We owe it to current generations to seize the opportunities for energy security and lower bills, and we owe it to future generations to tackle the existential climate crisis.”
The CCC says it is important to get levies off electricity bills, to reduce the cost of running heat pumps and make gas (and gas boilers) relatively more expensive.
This will help wean the UK off gas and on to climate-friendly solar and wind power, making it easier to become net zero and shielding the country from volatile gas price increases.
By 2050, a typical household’s driving fuel costs will be around £220 per year, compared to around £790 in 2025 (excluding fuel duty), according to the CCC.
This is largely due to a switch to electric cars, with energy costs already three times lower for electric than petrol cars per mile (on the basis of home charging).
Electric cars are more expensive upfront than petrol cars, but this price premium is falling quickly and new electric cars are expected to cost less upfront by 2026 to 2028.
Depending on the level of policy support, a typical household will experience around £550 in savings per year, on average, from 2025 to 2050, according to the CCC report.
On Tuesday, Ofgem announced annual dual fuel prices will rise by an average of £111 per household to £1,849 from 1 April.
This is as a result of “a recent spike in wholesale [gas] prices … A small increase in policy costs and associated inflationary pressures make up a further 22 per cent,” Ofgem said.
Emma Pinchbeck, CCC chief executive, said: “It’s been really hard for years for people, and a large proportion of that hardship has come from our dependence on volatile gas prices and the cost for people of heating their homes.”
“And anything we can do to get these technologies [heat pumps and electric vehicles] into people’s hands and make the use of low-cost electricity, I’m well up for, on a cost-of-living basis,” she said.
Under the CCC’s proposed pathway to net zero, the bulk of emissions reductions would come from “decarbonising” the power grid using wind, solar and other sources of renewable energy – and replacing petrol and diesel cars and gas heating systems with electric alternatives.
This means that renewable energy would provide the bulk of generation in a larger, future electricity system.
This saves money because it is a more efficient way to produce electricity than through gas-fired power stations.
Under the pathway, electricity then replaces oil and gas across most of the economy, including EVs, buildings, and much of industry.
This will require twice as much electricity as today by 2040, the report added.
A move away from gas would also have the added advantage of reducing the need for new gas reserves to keep the heating on during prolonged periods of cold weather, the CCC said.
Earlier this month, The i Paper warned that the need to boost gas storage facilities risked pushing up bills in the coming years.
Low-carbon supply
By 2040, our net zero pathway sees offshore wind grow six-fold from 15 GW of capacity in 2023 to 88 GW by 2040. On-shore wind capacity doubles to 32 GW by 2040 and solar capacity increases to 82 GW.
Alongside renewables, storable forms of energy including nuclear and batteries, as well as sourcing energy from neighbouring countries through giant “interconnector” cables, ensure a reliable supply of electricity even in adverse weather years.
These technologies need to be accompanied by rapidly expanding the transmission grid, upgrading the distribution network, and speeding up the grid connection process.
EVs
By 2040, our net-zero pathway sees three-quarters of cars and vans and nearly two thirds of heavy goods vehicles (HGVs) on the road being electric, up from only 2.8 per cent of cars and 1.4 per cent of vans in 2023.
The share of new car and van sales that are electric grows quickly, ahead of the zero-emission vehicle mandate, reaching around 95 per cent by 2030 and 100 per cent by 2035.
This is propelled by the falling cost of batteries, which allows electric cars toreach price parity with comparable petrol and diesel cars between 2026 and 2028.
Our pathway assumes battery-electric vehicles are chosen to decarbonise all HGVs.
Heat pumps
By 2040, our net zero pathway sees around half of homes in the UK heatedusing a heat pump, compared to around 1 per cent in 2023.
This requires the annual rate of heat pump installations in existing residential properties to rise from 60,000 in 2023 to nearly 450,000 by 2030 and around 1.5 million by 2035, a rate of increase in line with that seen inother European countries such as Ireland and the Netherlands.
But installation rates do not exceed natural replacement cycles; heating systems are only replaced at the end of their life.
All new and replacement heating systems become low carbon after 2035 to ensure a fully decarbonised housing stock by 2050.
Comments
Leave a Comment