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How Will the Energy Crisis End?

How Will the Energy Crisis End?

What started as a peripheral worry has now escalated into one of the most – if not the most – pressing problem we face. In a twist of dark irony, the initial warnings were largely buried under media coverage of the very issues that created it – the disruption of Covid-19, the political tension and subsequent invasion of Ukraine by Russia, inflation, and the ongoing uncertainty caused by our reliance on dwindling and damaging fossil fuels.

Now, however, the problem is not only plain to see, but it’s something that many of us are having to confront face-to-face. Ofgem announced last winter that April would see the price cap rise by £693 and, since then, households that are reliant on the national grid have been forced to adjust their finances for an unprecedented rise in the cost of living. Fuel poverty, which refers to the inability to afford to heat and power one’s home, is something we covered in our initial guide to the energy price hike before the price cap increased. As predicted, the problem is growing rapidly, with the only consolation being the fact that most of us are not currently in need of our central heating.

But the energy crisis is not a summertime problem. While blue skies stretch over the country, many of us are already contemplating a long and difficult winter – the likes of which have not been seen in many, many years. On 20th June, it was announced that the energy price cap is expected to rise to almost £3,000 this October – truly devastating news for countless households across the country who are already incapable of saddling the higher costs of their energy bills.

Beyond the immediate financial concerns, however, it also begs the question – when (and how) is the energy crisis going to pass?

First of all, how bad is it expected to get?

If the government fails to step-in and prevent the price cap from increasing this autumn, it is expected that millions of British households will be rendered incapable of paying their energy bills, even with financial assistance in the form of support schemes and (repayable) loans, designed to help the most vulnerable billpayers first.

For obvious reasons, those who will be hit hardest by this catastrophe will be low- or single-income households, those with disabilities, and the older generations – all of whom are incredibly vulnerable. Choosing between eating enough and warming one’s home to a habitable temperature – or between feeding one’s children or being able to light the home at night – is simply incomprehensible.

An early estimate from Ofgem suggests that 12 million households could end up in fuel poverty. With the average UK household size sitting at 2.4, even this preliminary calculation hints at a devastatingly difficult winter for a massive portion of the population.

What needs to change?

The energy crisis is the result of an accumulation of issues, and, as is obvious at this point, there is no ‘simple solution’ to the problem. Nevertheless, there is a general tone of surprise and disillusionment being felt toward the government who, thus far, have offered very little help to society’s most vulnerable.

A lower VAT rate on energy bills is one proposed solution, but it is unlikely that the benefits will be significant enough to truly protect those who are experiencing, or on the brink of, extreme financial difficulties.

Another option is for the government to assist the energy suppliers, rather than the billpayers directly. Earlier this year, for instance, Octopus Energy proposed that the government provide around £20 billion in the form of loans to energy suppliers, so that they and others can stagger the rising wholesale costs of energy over a longer time period – and, as a result, avoid the sharp spikes we are seeing each time the price cap increases.

Ultimately, however, any suggested solution to the immediate cost of living crisis is tantamount to a bucket placed under a leak. In order to help those who are – and were – always the most vulnerable to a crisis of this nature, and to prevent a growing number of people from being drawn into a crisis of their own, the government needs to angle themselves toward a permanent solution.

Immediate relief for millions of households – and the guarantee of protection against the terrifying predictions for October’s price cap rise – are both essential, but they will mean very little if the country is not prepared for the long-term that waits on the other side of Winter 2022.

Is there a permanent solution?

Yes, and it is up to the world’s governments to embrace it or not.

The global fossil fuel market is a volatile beast. Even when it appears to be ‘keeping itself to itself’ and moving along steadily, there is a constant risk that it could turn on us at any given second. It has happened many times before, though not to quite the same extremes that we are experiencing right now – a sort of ‘perfect storm’ for the global energy supply chain.

Essentially, what this means is that we can never ‘go back’ to trusting the global fossil fuel market, because we never could trust it in the first place. Even if our household bills return to normal and the millions pushed to the brink of fuel poverty find that they are once again able to afford the basic necessities, the bigger crisis will be far from over.

Why? Because the only permanent solution to fossil fuels is a wholly renewable, safe, and sustainable infrastructure prepared to power homes and businesses across the country.

Why?

Fossil fuels are a rare resource, and the bulk of oil and gas available to be mined is controlled by a limited number of entities. In times of war (as we are seeing now), there is a lot to be gained from controlling the availability of fossil fuels, and effectively severing those supply lines in order to gain an advantage. Beyond that, however, those who control the flow of fossil fuels are keenly aware of the extent to which their customers – the energy suppliers – depend on oil and gas. With demand high and supplies low, they can continue to raise the prices without repercussions.

For instance, in May of 2022 – months into the energy crisis, when countless households were already feeling the pressures of rising bills at home and at the petrol station – it was revealed that energy giant BP had seen their profits double during the first quarter to around £5bn. In spite of this news, Prime Minister Boris Johnson argued against a windfall tax to protect the public against these incidents.

Further to this, despite the UK’s commitment to phasing out coal usage by the end of 2024, one of the options on the table to reinforce the country’s energy supply is to maintain investment in North Sea oil and gas during the winter months. Yes, this solution contributes to avoid the last resort of ‘blackouts’ – shutting off electricity to millions of homes in order to reduce demand and conserve supply – but it continues to use resources and production methods that severely impact our environment. Despite the government suggesting these are worst-case scenario forecasts, they offer short-term gains for devastating long-term effects. War itself is a huge pollutant and causes governments to consider polluting solutions to combat this war’s domestic effects.

What can renewable energy do?

A greater capacity for renewable energy production, whether through solar, wind, wave, or any other means of producing heat and electricity we can feasibly introduce, will naturally mean a reduced need for fossil fuels. It stands to reason that the more homes and businesses that are powered by the natural elements like the sun, the fewer homes and businesses will be impacted by any volatility in the energy supply chain.

On the smaller scale, having solar PV installed on your own property means no longer needing to face a daunting unknown each month. One of the few things we can guarantee is that the sun will always continue to rise, whatever is going on down below, and that represents one of the only ways we can avoid the anxiety of living life by the whims of the global fossil fuel market.

Similarly, renewable energy can protect smaller-scale businesses from the same fate. Alongside households, businesses across a wide range of industries still recovering from the impacts of Covid-19 are struggling under the weight of increased energy bills. In early spring, for instance, new research found that small businesses were facing an increase of around £10,000 to their utility bills, and, for many, the predictions rang true.

Ahead of the price cap increase this October, commercial solar installations offer one of the most viable, long-term solutions. And, while immediate relief from the burden of another energy bill is likely to be a priority for most of us at the moment, knowing that the future is secure is the only way any of us can begin to see through to the other side of this energy crisis. 

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