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Will the Energy Crisis Continue into 2023?

First, there is relief. The chaos and fear surrounding Covid-19 is largely behind us while, just last year, it still felt like a heavy weight on our shoulders. For that reason alone, end of the year celebrations should feel all the more poignant, but a year without tough Covid restrictions has been a year of alternative (and, in many ways, just as devastating) trials. And, just as the coronavirus cast a shadow over the last two Christmases, these new trials are throwing into question our ability to keep calm, carry on, and enjoy an opportunity to both reflect and look ahead to a new year.

The year has seen a long list of pivotal moments, but many of them are rooted in the same key issue – the global energy crisis. In Britain, its effects have been altering the ways in which we live, plan for the future, and manage our finances since the very beginning of the year and, as of the time of writing, very little improvement seems to have been made.

The Energy Crisis in Britain – a Quick Recap

We first wrote about the energy crises back in October of 2021, when it became clear that 2022 would set the scene for an unprecedented energy price hike and, as a result, a devastating rise in the number of households facing fuel poverty. You can read the original article here.

The price cap had already increased that October to £1,277 for the average customer paying by direct debit – what now seems to be a relatively modest sum.

And, as anticipated, the energy price hike did come. In April 2022, Ofgem announced that annual household energy costs could now reach £1,971 (again, for default tariffs paid by direct debit). This meant an increase of more than a third, and set the tone for an incredibly difficult and traumatic year for thousands of UK households.

Even as the spring gave way to the hottest summer on record – another conflicting moment for communities around the world, as it brought us unnervingly close once again to the climate crisis – and millions of households managed to get by without switching on the heating, using the tumble-dryer or, at times, powering up the oven, household bills continued to climb vertiginously high.

From that moment on, October 2022 represented a bleak point on the horizon. We had no time to adjust to the news before headlines started to stir up widespread fear of the autumn. Not only would we need to retreat inside and rely on the central heating – and a long list of other heat-producing appliances – once again, but October would mark the second point of the year when Ofgem could raise the price cap.

That is, of course, exactly what happened. Two months ago, the price cap was raised to £3,549 (direct debit), and £3,608 (prepayment meters).

This marked an 80% increase in the space of 6 months. And increase from a number that already proved untenable for so many people, to a number that was simply inconceivable. Fuel poverty has continued to spread through vulnerable groups, pushing many to turn to food banks, as the lion’s share of their household income had to be rediverted to pay for gas and electricity.

Relief from the Energy Crisis So Far

The government has extended some help to those who are struggling with the new cost of living, although they have faced consistent criticism for their unwillingness to really step-in – to impose a windfall tax on energy suppliers, or do something to prevent the cost of powering a home from continuing to rise.

Instead, the help has come in the form of a number of relief schemes, primarily targeted toward the country’s most vulnerable. Pensioners, people with disabilities, and households living on benefits have all received support packages amounting to £300, £150, and £650 respectively. Homes liable to pay council tax also received £150 in the form of a rebate.

The government also raised the contribution thresholds for National Insurance, Winter Fuel Payments to households that include someone of State Pension Age (£200) or over the age of eighty (£300), and introduced a number of other, more minor schemes.

The government’s response to the cost-of-living crisis has, however, been largely criticised. They have been widely accused of prevaricating – of behaving too timidly in the face of energy giants, and not imposing the windfall tax on energy producers whose profits reached new highs in 2022.

Of course, the rising energy prices have been largely attributed to the ongoing war between Russia – who export billions of dollars’ worth of oil and gas each year – and Ukraine. With countries looking to minimise their dependence on Russia, energy supplies have been limited and, as a result, the price driven up. However, these sky high prices are being determined by the world’s energy giants – and recent findings shed light on the shocking profits made by producers this year.

The most significant response stems from charitable groups, and community-based initiatives looking to protect their most vulnerable members from having to choose between feeding their families, and keeping the house warm. The added strain on food banks, the need for safe and warm spaces to be made available throughout the day and night, and a growing dependence on donations has prompted a strong response from the public so far.

What will happen in 2023?

For so many people, the most recent cost-of-living surge still feels very recent – particularly because such a large portion of the population currently face a daily struggle between heating their homes as temperatures drop further and further toward zero, and feeding their families.

And yet, as we draw closer to the year’s end, it has now become clear that, without significant intervention from the government – or a rapid change in circumstance for the entire world – households face another devastating blow. In January of 2023, the energy price cap is going to rise to £4,297. Fortunately, the Energy Price Guarantee defends bill payers against these absurd costs, meaning that the average household bill will not increase significantly in the New Year.

However, in April of 2023, this guarantee will increase to £3,000. If the energy sector does not face rapid reform between now and then, households will face another steep hike to their energy bills.

And, even if the energy sector does return (as much as is possible) to normal, the sheer extent of its own volatility has now been proven. The war between Russia and Ukraine is not the only catalyst driving energy prices up, and, even in times of peace, the fact remains that our dependence on fossil fuels is untenable. The world places an incredibly high demand on oil and gas – and, in some countries, coal, too – and every moment of the day and night, the amount of oil, gas and coal the world has to offer is going down.

Some have already warned that this winter represents a preview for winters to come. Fuel poverty and soaring prices will, sadly, represent familiar foes over the next few years.

Of course, there is one clear pathway out of this: a green recovery.

Why is a Green Recovery the Solution?

Sustainable energy is not only available in unlimited quantities to communities across the globe, but it is also free. The wind, the sun, the waves – they all represent natural power sources that continue to blow, shine, or go through their cycles whether or not we are harnessing that power.

A green recovery is not just about saving the planet and stopping climate change in its tracks. It’s also about providing billions of people with the technologies they need to live safe, comfortable lives in their homes – and at work – free from the emotional strain of depending on energy providers to be ethical.

From commercial solar to solar at home, this country is ready to align itself with a force far more dependable than the global energy market, where the only constant is an insatiable greed for profit – even at the cost of human life.

Nature can be allowed to recover, even as it heats and powers our homes and businesses. It is not a source that can be depleted, provided we rely on the technologies that are designed to harness its power, rather than compete with its need for constancy.

The government have proven reluctant to embrace sustainable energies, with former Prime Minister Liz Truss making no secret of her disdain for solar farms. Plans to build a new Nuclear Power Station have face significant backlash – primarily for the fact that they do not represent a truly sustainable, clean source of energy. We can only hope that, following COP27 in Sharm el-Sheikh, our leaders’ minds will have been changed, and that 2023 can represent a year for unprecedented change, rather than more of the same.

Atlantic Renewables

Atlantic Renewables are a solar PV design and installation company, providing affordable solutions in Manchester, Cheshire and throughout the North West.