Over the past year, energy prices have increased for the vast majority of people in the UK.
Whilst some of this can be caused by inefficient heating equipment that may necessitate a boiler repair, a larger reason is the increase in energy prices which has necessitated a government-mandated price guarantee.
What can confuse some people who do not have a gas supply and use either an electric boiler or another electrically powered heat source such as a heat pump is that natural gas prices will still dictate the overall cost of energy, even for companies that use renewable energy sources.
The reason for this is based on how the wholesale market for electricity works, which is a single market made up of four distinct entities:
- Transmission Networks – These are the National Grid for electricity and the National Transmission Network for natural gas, and include the entire network of pipes and cables that ensure the country remains powered.
- Generators/Transporters – These are the businesses and systems that generate electricity and export it straight to the National Grid when it is needed.
- Energy Suppliers – These are the businesses that buy electricity and/or natural gas and supply it to customers.
- Local Distribution Networks – These are the local pipes and cable networks that transform the high-voltage electricity supplied by the National Grid into lower voltage electricity supplied to homes and businesses.
The prices charged by each of these points are interdependent and can change on a half-hourly basis at times depending on the demand and availability of power.
The prices are set in a system known as a merit order, which is the order of preference for electricity generators. Typically renewable energy sources are prioritised as they are the cheapest, whilst fossil fuels tend to be more expensive.
However, as natural gas is a necessity in case renewable supplies cannot cover demand, they have a disproportionate effect on energy prices, one that will appear increasingly so as Britain moves towards a greater proportion of renewable energy supplies until natural gas is no longer used at all.
As energy generators sell at the market rate, and the most expensive form of energy generation sets the price, this has caused the price of natural gas and the price of electricity to become intrinsically linked, and as worldwide gas prices increase, this has caused energy costs as a whole to increase substantially.
This is why, even if you do not directly use natural gas, gas prices can affect your energy bills, particularly during times in which there are global shortages.
One of the best ways to reduce energy bills, therefore, is to reduce the amount of energy and heating you use, which can be done by ensuring that your boiler has been recently inspected and is in good working order to avoid inefficiencies and potential faults.
As well as this, only run appliances such as dishwashers and washing machines when they are full to reduce the number of cycles they need to run a week, turn off lights you are not using and stop leaving gadgets on standby.