An expert panel of industry leaders stated that the UK is at risk of experiencing a sharp increase in energy costs, which in turn increases the cost of living. According to them the main reason behind the energy crisis is the overdependency on Gas for its power plants and home heating. The price spikes are important to prevent consumer consequences as well as the impact on the economy.
The Energy Crisis Commission gives warnings about the underestimation of an upcoming energy crisis due to overdependency on gas. As the UK was shocked by high gas prices insulating homes and scaling up the installation of heat pumps is still negligible.
The beginning of the price hike was in late 2021 as 29 household energy suppliers failed. In addition to that the invasion of Russia into Ukraine in 2022 also worsened the energy crisis. This forced the UK government to provide subsidies in the bills.
The UK could not reduce the energy demand, especially from gas which is volatile to the global market. The impact of this differs from household to household. There are vulnerable households to have a nine in ten cutback in energy use. Fuel poverty has hit almost 7.5 million households.
The crisis affected nearly every business in the UK from industries, and small businesses to street firms. The crisis also affected firms’ operations, almost one in ten firms reported that they are ceasing operations as a whole or some of their business. One in five firms requires funds from the cash reserve to overcome the energy crisis.
According to Dhara Vyas, deputy chief commissioner at Energy UK, the commission report came with a sense of urgency. She also remarked that global instability is a major factor of the increase in price so prior preparation is required to avoid the repetition. Switching from volatile fossil fuels to cleaner domestic power is the ultimate solution for the upcoming hikes.
While the commission is concerned about the progress that has been achieved they also appreciate the new government’s efforts in tackling energy concerns by promoting renewables and upgrading grid carbon capture and storage.
The chairman of the committee David Laws appreciated that the current government is on the right path and that the scale and pace should be increased to sustain. There are recommendations on what to do on the demand side and how to support the households.
The recommendations also included the development of a new strategy that reduces the dependency on fossil fuels, improving energy efficiency in households. The energy-intensive firms should be given support to decarbonize and pursue reforms in energy utilization.
The report also emphasizes the importance of protecting consumers from the failure of suppliers. If the UK implements this report then the impact of global energy price shock on economies and societies can be minimised.
According to the Secretary of State for energy security and net zero Ed Milliband, the report supports the core mission of the labor government to make Britain a clean energy superpower. The Government is looking forward to effective strategies for replacing fossil fuels with energy. This could transform the power consumption method in the future.
The government should find a way to strike a balance between resilience and competition in th market. According to the reports, the top priority of the government is to protect the customers. They have worked tirelessly in collaboration with the government to take necessary actions so that the customers get protected from the impact of rates going out of bounds.
Since then efforts have been made to strengthen the resilience of the sector so that the risk associated with future supplier failure can be reduced and safeguard the consumer if those efforts fail. Notably, not much effort has been made after the energy crisis. We hope that Britain shall be prepared for the upcoming energy crisis predictions.
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