Funding the future; protecting the present

By Jonny Bairstow, Head of External Affairs at the ADE

A couple of weeks ago, the new Chancellor of the Exchequer, Kwasi Kwarteng, announced a package of fiscal measures aimed at tackling the energy price crisis and boosting the economy. Energy was front and centre, reflecting growing public anxiety about rising bills and the need to combine long-term infrastructure investment with short-term support as winter approaches.

In the package, Mr Kwarteng provided an extra £1 billion for energy efficiency over three years, in addition to a disappointing reiteration of £2.1 billion already pledged. While the new funding is undoubtedly welcome, household bills still remain significantly higher than before the gas crisis – clearly, more needs to be done.

The End Fuel Poverty Coalition notes that even with additional support, energy bills for households will be 64% higher than last year and some seven million households will be facing fuel poverty this winter.

At the ADE, we believe shorter-term bailouts that fail to reduce the amount of gas homes need to keep warm will lead to higher costs to the public purse overall. To prevent this, Government must build upon the announcements that have already been made, look to more ambitious short-term funding for energy efficiency and explore long-term targets and delivery mechanisms to prevent the gas crisis from affecting households again in the future. It’s no use recovering from one crisis only to plunge into another the following winter.

The Government also set out new plans to help cut energy bills for all non-domestic customers, including all UK businesses, the voluntary sector and the public sector, with a commitment to make this equivalent to the Energy Price Guarantee put in place for households. Now we need to see more clarity on what this support package means for large industrial users, who form the backbone of many regional economies. It is still not yet clear which types of large energy users will fall within scope of the support, and businesses reliant on technologies such as Combined Heat and Power (CHP) must not be excluded.

Of course, it’s not just CHP that needs support. Other decentralised energy technologies such as energy efficiency are critical to tackling both the climate and energy price crises immediately and in the long-term. The CBI recently noted: “The long-run solution is to double-down on energy security and to incentivise firms to push ahead with ambitious energy efficiency programmes to lower demand.”

At a time when freeports and tax-free investment zones are being mooted as ways to bolster regional economies, there is a clear dichotomy between long-term planning for growth and finding the package of support that will help UK industry and business to stay alive in the immediate term. Similarly, public sector organisations face extreme challenges when it comes to providing public services, finding themselves balancing between the twin threats of ongoing austerity and rising costs.

Recognising these challenges is a good start, but working together to address them is the critical next step. At Heat and Decentralised Energy 2022, we’ll be bringing together experts from the energy, decarbonisation, policy and investment sectors to see how we can build connections, support people and businesses in the short-term, as well as to develop strategies for addressing the long-term future of our energy system and everything that it enables. Book your place now at Heat and Decentralised Energy 2022.