With natural gas prices rocketing by more than 420%, the UK dealing with too little wind, the IFA-1 electricity cable fire and energy suppliers going out of business, what’s next for the energy industry?
The 'energy crunch' will affect millions
Fuel poverty is not simply a trending hashtag. Millions of UK households will face a hike in their energy bills. As a result, heat or eat is a decision thousands of customers in vulnerable households will inevitably face in the coming winter months…if they haven’t already.
Without the media hyperbole, we would not have witnessed the dreadful scenes on petrol forecourts around the country last month. That said, the energy crunch is far from just another ‘open goal’ for the media to whip their readers into another frenzy.
News headlines have made us only too aware of what’s happened to the UK energy industry recently. Without a crystal ball, it’s difficult to predict, but what can we expect?
Short term solutions
- More gas will be available in the coming few months - this will eventually drive the prices down and see a return to a more recognisable market.
- Ofgem and the Government may intervene, in the form of a financial plan for energy suppliers who are taking on new customers under Supplier of Last Resort (SoLR).
- Energy suppliers will go out of business or be swallowed up by one of the larger energy companies such as: British Gas, EDF Energy, E.ON, Scottish Power, OVO Energy or Octopus energy
- More UK households will need help with their energy bills. Along with other economic factors, the pressure will mount on vulnerable and low-income families.
Are there long-term preventative measures?
Back in 2017, the US Energy Information Administration (EIA) claimed coal, oil and natural gas will still account for 77% of our energy in 2040. These fuels will continue to increase in price unless the UK increases its renewable roll-out and pushes towards carbon zero.
The UK will continue to be exposed to the international gas market if long-term investment in storage technology continues to be overlooked. Less than 1% of Europe’s stored gas is held by the UK. However, carbon capture and storage over a long period would enable the UK to replace fossil fuels and nuclear power.
The question of whether the price of renewable energy, sourced from wind, solar, hydro and tidal will decrease as more consumers switch over is pertinent. Only time will tell, but EIA recently reported that most new wind and solar projects will be cheaper than coal.
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