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22 Dec 2020

Five ways the December 2020 energy white paper will affect your gas and electricity use

How your energy bills, tariff, heating and boiler could change
Family in a cosy home in winter

Future plans from the government will affect how you heat your home, choose a new energy supplier, pay for your gas and electricity, and even what new-build homes will look like.

Some of the changes could start as early as next year. So here, we round up the key announcements, and what they mean for you and your home.

At this stage, lots of the announcements are subject to consultation. This means that the government has yet to decide on the exact details. We'll be keeping an eye on the changes and update you when we know more.

Start with straightforward practical steps - see 10 ways to save money on energy.

Air source heat pump

1. Your next boiler might be a heat pump

From the mid-2030s, all newly installed heating systems are to be low-carbon or capable of being converted to clean fuel.

The government wants to reduce emissions by moving away from heating our homes with natural gas, a fossil fuel.

Electric heat pumps are a key option. The government aims to be installing 600,000 of them a year by 2028.

Heat pumps extract warmth from the air or ground, and raise its temperature to provide space and water heating. There are two types - ground source heat pumps and air source heat pumps.

You need good insulation to heat your home efficiently with a heat pump and usually underfloor heating or larger radiators. They're not suitable for all homes, though. For example, a ground source heat pump requires a certain amount of outdoor space.

Modern luxury flat apartments
Other options include clean-fuel heat networks (where one heating source is shared by a group of homes, such as flats), biomass boilers (in some cases) and hydrogen heating.

Trials for hydrogen heating have begun and the government plans to pilot it across a whole town this decade. Find out more about hydrogen heating.

There's no set date by which you have to replace your gas boiler. Instead, the aim is to replace gas boilers as they reach the end of their lives.

Other key heating announcements include:

  • A new Clean Heat Grant could replace the Renewable Heat Incentive scheme in 2022 to help homes finance renewable heating, especially heat pumps
  • A consultation on whether new homes built from 2025 should not be connected to the gas grid
  • A consultation on phasing out fossil fuel heating in homes that aren't on the gas grid, including an end date for them using existing fossil fuel systems.
New build houses

2. If you buy a new-build home it will be 'zero-carbon ready'

Two thirds of home currently have an Energy Performance Certificate (EPC) rating of D or lower. The scale runs from A-G, with A the most efficient.

Home heating is responsible for more carbon dioxide emissions per year than transport, food or aviation.

The proposed Future Homes Standard would mean that all new-builds must be 'zero-carbon ready'. This means that they will have to have low-carbon heating and be well insulated.

They will emit 70 to 80% lower carbon emissions than current standards, the government Department for Business, Energy and Industrial Strategy (BEIS) says.

It will be looking at EPCs over the coming year to make them better and encourage homeowners to use them more.

Find out more about buying a new build.

Couple cooking on a gas hob

3. More people will get the Warm Home Discount

Currently, the Warm Home Discount is worth £140 per year. It's an annual payment, added to the electricity account of eligible customers between September and March. More than 2.2 million people received it in 2019-20, mainly those who get the Guarantee Credit element of Pension Credit and those on low incomes.

This would increase to around three million homes and be worth £150 per year.

The government also plans to reform the scheme to better target people living in fuel poverty. This may include extending the scheme to all suppliers so you can claim it from any energy firm. At the moment, energy firms with fewer than 150,000 customers don't have to offer the Warm Home Discount.

Find out more about the Warm Home Discount and what to do if you can't pay your energy bill.

woman on the phone looking at an energy bill

4. You might automatically switch energy supplier if you don't do it yourself

If you don't switch energy supplier, you can miss out on around £200 of savings on your gas and electricity bills each year. That figure is an average, based on a home using a medium amount of gas and electricity (according to energy market regulator Ofgem), and comparing the cheapest deal with the current level of the price cap.

The price cap on default or out-of-contract energy tariffs limits the amount suppliers can charge customers - although, remember that it's effectively a limit on the unit rate and daily standing charge, not a cap on your total bill.

It's set to end in December 2021. The white paper states that BEIS believes that 'competition is the most effective and sustainable way to keep prices low'. It plans to review default tariffs and consult in March 2021 on testing opt-out switching.

Opt-out switching means that you would be switched to another tariff, unless you ask not to be.

It's also planning to consult on opt-in switching, including how to design, test and roll it out. This could mean that you're switched automatically if you ask to join in. Ofgem ran a trial of this in 2013 in which between 19% and 30% of people switched their tariff. It hopes to introduce it by 2024.

Other key switching announcements include:

  • Price comparison websites, autoswitchers and energy brokers may be regulated by Ofgem, depending on the outcome of a consultation in spring 2021 (currently they aren't)
  • Looking at affordability and fairness, including more help for customers who can't afford to pay their bills.

At the moment you need to take action to get a cheaper energy deal. Use Which? Switch to compare gas and electricity prices, and find the best deal for you.

Wind turbines in snowy fields

5. Finding a green energy tariff could get easier

The paper says that BEIS will ensure that consumers will be provided with more transparent and accurate information on carbon content when choosing their energy services and products.

This could help you work out which suppliers and tariffs will best help you reduce your carbon footprint.

It plans to hold a consultation on this in early 2021. This will include looking at 'quantifying the additional environmental benefit of a tariff marketed as '”green”'.

While there are many tariffs selling 100% renewable electricity to choose from, fewer 'green gas' tariffs exist. Enough green gas for around 1m homes was generated in spring 2019.

The government plans to increase the proportion of biomethane in the gas grid. It will finance this through a green gas levy on all suppliers. It expects gas bill payers to pick up the cost.

This all depends on the outcome of a consultation in early 2021. But, if successful, it will pay to build new anaerobic digestion plants. The government hopes this will generate enough green gas for 230,000 more homes.

Biomethane, or green gas, is created when organic matter is broken down without oxygen. This can be grass, food or farm waste.