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Your energy bills will rise without efficient appliances

Energy efficiency savings offset low-carbon policy costs, report reveals

Climate policies are expected to add £200 to your energy bills by 2030. But buying energy efficient boilers, fridges and washing machines, and using LED light bulbs can cancel it out, a new report reveals.

Being energy efficient at home has saved consumers around £290 per year since 2008, according to the report from the Committee on Climate Change (CCC). This saving helped to balance out the £105 added to your bill each year to fund government low-carbon policies.

The CCC predicts that you’ll be able to save around £150 per year through energy efficiency in the future, while low-carbon policies could add a further £85-£120 to your bill per year by 2030 if the UK continues to introduce policies to meet climate objectives.

Energy savings so far are due largely to minimum efficiency standards for appliances, the CCC report said. So replacing old, inefficient appliances when they reach the end of their life with more efficient ones is key to keeping your gas and electricity bills in check.

See our guide to buying energy efficient appliances.

What makes up your energy bill?

Low carbon policy costs made up 9% of the average dual-fuel bill in 2016, the CCC states. The majority of your bill is wholesale costs, network costs and operating costs.

If you have electricity only in your home, a greater proportion of your bill (18%) is made up of policy costs. This is because it’s a subsidy on your electricity bill that pays for the cost of generating more renewable electricity, reducing coal power and installing measures, such as insulation.

The UK has a target for 75% of electricity to come from low-carbon sources by 2030. To meet this, and other policy costs, a further £85-£120 per year will be added to your gas and electricity bill by 2030, the CCC estimates. But it believes energy efficiency savings will balance this out.

The CCC states that the average dual-fuel bill is around £115 lower now than it was in 2008, when energy prices were at a peak. But it predicts that rising wholesale prices will push bills up by £190 to around £1,350 per year by 2030.

The report looks at the impact of carbon budgets on consumers’ and businesses’ energy bills.

Making your home energy efficient

We’re using 23% less gas and 17% less electricity at home now, than in 2008, according to the CCC.

If you’ve had insulation installed (or topped up), or bought a new appliance that’s more efficient than your old one, you’ve contributed to this.

Breakdown of what’s responsible for energy savings:

  • 61% appliances
  • 22% efficient condensing boilers
  • 17% home improvements. Plus changes in how we use energy. For example, in 2005 we used to keep our homes at more than 18°C on average. Now it’s 17°C.

How you can make savings

If you haven’t replaced your appliances or boiler in the last eight years, you’re likely to see savings on your energy bills when you do. Which? research estimates that swapping an old-style boiler with a modern gas condensing boiler can save you around £652 on your heating bill each year.

Energy efficient LED bulbs use almost 90% less energy than traditional incandescent bulbs. Although they can be pricier to buy than other types of bulbs, they’ll save you around £180 in energy use over their 25 year lifetime, compared with incandescent bulbs.

Meanwhile, if your loft is uninsulated, fitting insulation to the recommended depth of 270mm could knock around £140 from your annual energy bill (based on living in a semi-detached house).

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