The energy market regulator has set out proposals to cut energy bills by £45 a year, enabling consumers to benefit from new technology like electric vehicles and renewables at the “lowest cost”
Britain is today generating increasing amounts of renewable energy just as electric vehicles simultaneously take to our roads in ever growing volume. It is clear for all to see, therefore, that we are getting and using our power in much cleaner, greener and more sustainable ways.
Though this much-needed energy revolution is only just getting started, consumers have so far had to front-up the cost of maintaining and upgrading the networks that enable this transformation – paid by us all through higher energy bills.
However, Ofgem – the electricity and gas market regulator – has now announced plans to make the establishment of our smart energy system “fairer” in this regard, vowing to provide consumers relief from rising energy costs by proposing measures that “will reduce bills by about £45 a year from 2021”.
This is to ensure “consumers pay a fair share for network services”, allowing them to “benefit from new technology like electric vehicles and renewables at the lowest cost”, Ofgem said in a statement.
A smarter, fairer and cleaner energy system
The regulator proposes a much lower cost of capital for network companies to raise the billions of pounds of investment needed in the next price control period from 2021. Ofgem wants to set the returns at 4% – about 50% lower than under the previous price controls – to save consumers £30 a year. The other £15 in annual savings for consumers would come from November proposals to reform network charges.
These separate proposals aim to ensure that homes or businesses who generate their own electricity on-site – and thus avoid many of the network charges that are passed on to regular consumers – also pay their fair share towards maintaining the grid.
Alongside this, Ofgem will press ahead with further network charging reforms to “squeeze more capacity out of the electricity grids, cutting the cost to consumers of moving to a smarter, more flexible energy system.”
This smart energy system, enabled by the nationwide rollout of smart meters, will potentially save Great Britain up to £40 billion overall between now and 2050 in terms of network and infrastructure costs, according to the Department of Business, Energy & Industrial Strategy.
In terms of direct cost impact for the consumer, the government calculates that smart meters could help save more than £1.2 billion per year on energy bills by 2030.
You can find out more about SMS Plc is leading this smart energy revolution here.