On average, household energy bills in the UK will not exceed £2,500 this winter. However, individual expenditure will vary widely depending on consumption habits and, most importantly, how the home is heated. While the quality of a house’s insulation plays a major role, making the most of a broad range of heat sources this winter could save hundreds of pounds.
Within days of taking office, Prime Minister Liz Truss addressed the worsening energy crisis by announcing the Energy Price Guarantee. Coming into effect on October 1, the scheme capped the unit cost of electricity and gas in the UK so that the typical household energy bill would not exceed £2,500 a year.
While expected to save British families an average of £1,000 per year, the policy as initially proposed would have required £150billion in borrowing – the Government covering the losses incurred by providers.
Alongside a broad range of unfunded tax cuts, the measure spooked financial markets and ultimately led to the sacking of Chancellor Kwasi Kwarteng last Friday. His replacement, Jeremy Hunt, was tasked with reaffirming the Government’s commitment to fiscal responsibility.
Although initially planned to last until the end of 2024, the Energy Price Guarantee will now be withdrawn and reviewed as soon as April. In a Monday statement, the new Chancellor said: “Today I want to confirm that the support we are providing until April next year will not change.
“But beyond that, the Prime Minister and I agreed that it would not be responsible to continue exposing public finance to unlimited volatility in national gas prices.”
At least for this winter, the average unit price for dual fuel customers paying by direct debit will remain limited to £0.34 per kWh for electricity and £0.10kWh for gas. Using these figures, it is possible to compare the cost of heating a home with gas versus with electricity over the coming months.
Central heating systems usually rely on a boiler that burns gas to heat water that is then circulated through pipes to radiators that heat the home.
Although the unit cost of gas is cheaper than electricity, gas boilers require regular maintenance and installation costs can run up to £4,500 according to EDF. Alongside the environmental impact of burning gas, there is also a risk of toxic carbon monoxide leaks from poorly looked-after systems.
More than four-fifths of UK homes are currently heated by gas – a far higher proportion than most countries – but the Government has announced plans to ban gas boilers in new builds from 2025.
The average household boiler in the UK consumes 35kWh of gas. This equates to 175kWh if run for five hours a day, coming to a daily cost of £17.50.
British homes are generally expensive to heat. According to the Institute for Government, the UK’s housing stock is among the least energy efficient in Europe. Out of the country’s 29 million homes, only eight million meet the highest energy standards.
The latest data from the Valuation Office Agency show one in six homes in England and over a fifth of homes in Wales were built before 1900. While almost half were built between 1930 and 1982, just seven percent of homes in England were built in 2012 or later.
Newer properties are typically far better insulated, and therefore cheaper to run as heat escapes less easily.
The Government currently has a range of energy efficiency improvement schemes in place under Help to Heat. These include the Boiler Upgrade Scheme, the Home Upgrade Grant and the Social Housing Decarbonisation Fund, all of which can be applied for via the Department for Business, Energy and Industrial Strategy.
There are an increasing number of alternative heating methods on the market. Air-source heat pumps offer an efficient and environmentally-friendly solution, albeit at an upfront cost of £10,000 on average.
Heat pumps have the benefit of generating three kW of heat for every one kW of electricity used. Assuming 10kWh of usage during a winter day, they cost £17 to run.
A considerably lower-tech solution with a far lower upfront cost yet much praised by consumers is Amazon’s Portable Mini Electric Fan Heater. Inserted straight into a wall plug and costing just £14.69, these 500W applainces will heat a room for five hours for just £0.85.
Another increasingly popular substitute is a log burner. Despite a purchase price ranging from £500 to £5,000 and installation reaching up to £1,500, according to the Stove Industry Alliance wood stove running costs amount to just a third of electric heating bills and come in 13 percent cheaper than gas central heating.