By Nicholas Earl
The Government should help households cut their energy consumption to ease demand and drive down soaring energy bills this winter, argued So Energy co-founder Simon Oscroft.
He told City A.M that “every marginal megawatt hour that is saved is going to be a benefit for everyone.”
Oscroft believed Downing Street should consider ramping up insulation and provide meaningful advice to households on how to make changes that could lower their bills.
He said “We are in a full crisis. Anything to alleviate demand is helpful.”
This follows Ofgem’s announcement thatthe energy price cap will rise to £3,549 per year from October – an 80 per cent spike on current rates, which are already an all-time high.
Anti-poverty charity National Energy Action has warned that, without more support, nearly nine million households will be dragged into fuel poverty this October- rising from 4.3m last year to 8.9m.
It feared that a warm home this winter will be a “pipedream for millions” amid ultra-high energy bills .
Fuel poverty is defined by a household spending over 10 per cent of their income on meeting their energy needs.
Forecasters Cornwall Insight has predicted that the cap will continue to rise sharply, peaking at an eye-watering £6,616 per year next April.
Wholesale costs have spiked in recent months, alongside gas and power prices, to near record levels amid a Russian squeeze on European energy supplies, and raised fears of shortages in supplies.
Reflecting the scale of the crisis, the Office for National Statistics revealed gas prices climbed a fifth in just a week at the beginning of August.
Insulation offers meaningful cuts to energy bills
Oscroft suggested that while the crisis was chiefly a supply problem exacerbated by Russia’s invasion of Ukraine, reducing demand could have an effect on rising bills.
He was in favour of boosting the energy company obligation scheme (ECO) – which is overseen by Ofgem -that aims to reduce fuel poverty and cut carbon emissions through energy efficiency measures such as insulation.
The fourth ECO order came into force last month and will cover a four year period until March 2026 but Oscroft believes it should be expanded to cover more households.
He described ECO as a successful scheme, and argued that the Government should consider expanding it as insulation is “key to driving down energy demand.”
“Insulating homes better, targeting more energy efficiency, and reducing demand – both on gas and electricity – is going to help here,” he explained.
However, Oscroft warned that it was beyond the capability of the energy sector to resolve the issue – without putting bills up further – meaning the Government would have to back any new insulation schemes with public funds.
He said: “The only people can make a judgement on supporting and rolling that out is Government by expanding their package and providing funding for this over and above what is managed by the industry itself. This is primarily a supply problem, but we can alleviate it with demand.”
So Energy is not the only firm backing a vast ramp-up in energy efficiency, with big five supplier EDF Energy (EDF) also calling for the Government to do more.
Phillippe Commaret, managing director of customers told City A.M. last week that loft and cavity wall insulation remains absent from around eight million homes, and could save billpayers £600 per year each from the next price cap hike.
Commaret argued: “Customers are not investing into energy efficiency in the UK, and the reason for that is that we do not put enough communication, enough help, and enough support for customers to invest into energy efficiency.”
Earlier this year, EDF published a study in partnership with Swift revealing the average insulation age of UK homes was 46 years.
The energy giant surveyed 2,000 UK homeowners, revealing more than than half (58 per cent) the country’s households only meet the insulation standards of 1976 or older.
Less than a tenth of homes scrutinised by the firm have an insulation age of 20 years or younger.
It is unclear whether Foreign Secretary Liz Truss, who is widely expected to win the Conservative leadership race, is considering energy efficiency measures.
However, her rival former Chancellor Rishi Sunak has committed to boosting energy efficiency, and is considering shifting funds from the heat pump scheme to insulation measures.
The Government has invested £6.6bn in total this Parliament to improve energy efficiency across the country.
Last year, it unveiled the Heat and Buildings Strategy, setting out a decarbonisation plan for households alongside commercial, industrial and public sector buildings.
However, installation rates have dropped sharply in the past decade from over two million homes per year to just tens of thousands after former Prime Minister David Cameron slashed previous efficiency schemes – according to the Climate Change Committee.
The Energy and Climate Intelligence Unit (ECIU) has revealed earlier this month that this will see around £1.5bn wasted on higher energy bills in the next financial year alone.
Its analysis suggests poorly insulated homes in efficiency band F will also pay £1,000 per year more than houses in band C.
Household advice – patronising or necessary?
Oscroft also believed consumers should be encouraged to reduce their energy use to help ease costs and minimise the need for rationing supplies this winter.
He argued that the Government could provide more information to households to cut down costs with minimal disruption to their lives.
This included lowering the boiler flow rate and reducing thermostat temperatures by just a couple of degrees, which could take £150-200 off bills.
He said: “The Government playing a role in offering advice in a more comprehensive manner would be significant and it would help. Those marginal gains on demand could be powerful.”
He highlighted examples from the continent such as the Spanish Prime Minister Pedro Sanchez asking people not to wear a tie at work to reduce electricity demand over the summer period and city administration in Germany requesting that municipal buildings to be heated to 19 degrees and no more.
So Energy has updated information on its webpages with more tips for its customers, although Oscroft believed a balance had to be struck between useful information and trivialising the pain facing households – which has been driven by soaring wholesale gas costs, not consumer behaviour.
Ovo Energy was severely criticised earlier this year for offering advice to customers that was widely considered patronising – including recommending customers cuddle their pets and do star jumps to reduce their consumption.
EON UK was also slammed on social media for offering customers free socks with slogans for cutting down energy usage.
Oscroft said: “It’s obviously important that we do this so it doesn’t seem patronising, but there are tangible things that everyone can do to save money. You’re not just helping yourself. You’re actually helping everyone in this country.”
After price cap announcement last week, Chancellor Nadhim Zahawi publicly called on Brits to reduce their energy use – suggesting the issue is being considered by Downing Street.
He told reporters: “The reality is that we should all look at our energy consumption, it is a difficult time.”
He also revealed The Treasury was working on support options for both households and businesses to be ready in time for the next Prime Minister.
Writing in City A.M. earlier this week, Zahawi said there would be “ready-made options for the energy crisis” for the next prime minister.
This comes amid media reports the Government is wargaming a four-day blackout this winter as an extreme worst-case scenario.
The National Grid’s electricity system has forecast it will have sufficient supplies to meet demand this winter, although this is predicated on excess supplies being available from Europe – which could be chanelled via interconnectors.
With droughts in Norway and nuclear outages in France driving down output across the continent, alongside reduced flows from Nord Stream 1 into Germany, there are growing concerns other countries will not sell at the required volumes to the UK in order to protect domestic energy needs.
Oscroft also reiterated his calls for the Government to provide more support for households.
He was open to the idea of a deficit tariff fund – as favoured by multiple energy firms – where the cap would be frozen for up to two years.
Suppliers would then take out state-backed loans from banks, which would be paid back 15-20 years by customers.
The energy boss was also open to expanding Sunak’s support package from a £400 discount to an £800 cut
So Energy has also called for the £150 Warm Homes Discount for vulnerable customers to be quadrupled to £600 this winter.
However, the key factor was in providing support to households as quickly as possible – regardless of the method.
He warned help needed to be announced as soon as possible, and that every day that goes by, “the tools which government has to intervene in the right way get fewer and fewer.”
So Energy is a renewables-only supplier, home to around 300,000 customers.
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