What a difference a week makes. It's almost as though our entire energy system is based on something fundamentally unstable
04.03.2026 08:59
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What a difference a week makes. It's almost as though our entire energy system is based on something fundamentally unstable
Speech had surprisingly little on global context. Truth is Iran has the potential to put government cost of living plans completely off track. UK exposed to disruption to LNG supplies from Qatar. Impact of gas price moves so far if sustained would be over £500 increase in energy price cap in July.
Have a read of this for more www.resolutionfoundation.org/publications...
And the Government's discount expires in 2029. Unless extended, the remaining £55 gets added back to bills overnight – leaving ministers facing a difficult choice, potentially just ahead of a general election
Bills over 2026 are on track to be more than £200 lower in real terms than in 2024. But network and policy costs will add around £150 by 2029 – and while lower wholesale prices should offset most of that, energy markets are unpredictable
And shifting costs from billpayers to taxpayers benefits those on lower incomes most. Savings are worth twice as much for the poorest fifth as the richest fifth - with higher earners contributing more through the tax system
The fall is driven mainly by the Government moving policy costs off bills – cancelling ECO and funding 75% of the Renewables Obligation from taxation instead. The average saving from this is around £135, but one-in-four households will benefit by more than £200
Energy bills are finally starting to come down – the next price cap will be £117 (7%) lower than today's. Much-needed good news needed for millions of hard-pressed families🧵
www.bbc.co.uk/news/article...
Tomorrow, Ofgem is expected to announce that the energy price cap for Q2 2026 will be nearly £120 lower than current levels.
This policy will deliver a boost to living standards from April and should help to keep bills below current levels until at least 2029.
Our analysis ➡️ buff.ly/zrvoZMp
The discount is only funded until 2029, leaving a cliff edge just ahead of a likely election. This means that extending (or expanding) bill support is likely – but it won’t be free. Government should settle the framework for how costs are split between bills and taxation sooner rather than later.
But bills are set to tick up over this decade. New costs for network infrastructure and policy costs are baked in, and the value of the Government’s discount will fall as the Renewables Obligation contracts it funds start to expire
By moving some costs from bills to the tax system, savings are worth twice as much to the poorest households as the richest – leaving households in the bottom nine income deciles as net beneficiaries on average.
💡 New @resolutionfoundation.org note on energy bills out over the weekend 💡
2026 energy bills are on track to be more than £200 lower, in real terms, than in 2024 – overwhelmingly driven by the Government’s discount kicking in this April.
www.resolutionfoundation.org/publications...
Today's report isn't usual territory, but does show our commitment to evidence. It would be easy to write a report saying protect consumers at all costs. Great analysis by @zackleather.resolutionfoundation.org persuaded us that wasn't the right answer. www.resolutionfoundation.org/publications...
🧵 New research on decarbonising UK farms and what it means for living standards.
The good news is decarbonisation should be manageable and won't cost the world - but it'll still be hard, as farming's in a fragile situation. Here's what we found 👇
www.resolutionfoundation.org/publications...
Excited to be finally launching our new report on agricultural decarbonisation tomorrow morning - 9:30 online or in person for anyone who wants to join!
🐑🚜🐮
www.resolutionfoundation.org/events/net-z...
Figure 1 shows, as well as ensuring stable funding, the Plan will also see all programs funded centrally, as the bill-funded Energy Company Obligation (ECO) scheme, which has dominated recent energy efficiency policy spend, was scrapped in the Budget last November.
After half a decade of chopping and changing on home upgrade schemes, the Warm Homes Plan should see a more consistent Government approach into the late 2020s.
As well as ensuring stable funding, the Plan will also see all programs funded centrally.
More on the Warm Homes plan➡️ buff.ly/QJ2881G
Lots of good stuff in the Government's Warm Homes Plan. See 👇👇👇 for the @resolutionfoundation.org hot take
Keeping the costs of delivering electricity to families down is vital too. New network costs will push up standing charges and these are already baked in. But for future deals ministers and Ofgem should think harder about keeping costs down www.resolutionfoundation.org/publications...
A key test is being able to use as much of this electricity as possible. This means changing how households interact with the energy system and pricing electricity to account for its different values at different times and in different places www.resolutionfoundation.org/publications...
Also good that floating offshore wind only accounts for <200 MWh of capacity – just 2 tiny projects being successful. There may be a long term role for floating offshore wind, but prices are too high (£216/MWh) for it to feature prominently now.
8.4 GW is a good haul – right at the top of end of expectations. And £91 per MWh (£89 for one project) shouldn’t see bills increase. Costs are high at the moment so this is probably the best that could be expected. Until interest rates come down we won’t see prices fall below those in earlier rounds
Good set of results on offshore wind auction contracts – the DESNZ team should be praised for balancing the need to deliver a lot of new capacity with the need to keep prices down www.theguardian.com/environment/...
A DESNZ CLEAN SWEEP
A package that saved at least £150 off the average household bill was the minimum this Budget needed to achieve to give Labour at least a fighting chance of getting to their £300 target, given the price rises next year. /1
energy bill discounts doing the heavy lifting on bringing down inflation next year
Big news on Fuel Duty - the 5p cut will be removed gradually from September. A good way to end this giveaway without pushing up inflation
So that's £125-ish off energy bills - ECO scrapped and 75% of renewables obligation costs moved into the tax system.
Big enough to offset bill increases coming next year, and most (~70%) of the savings coming from electricity bills instead of gas. Overall pretty good.
It's *possible* the Budget could be very green:
🟢 Focus all price cuts on electricity, not gas
🟢 Don't cancel Fuel Duty rises
🟢 Cushion future EV VED rise with public charger VAT cut & other support
🟢 Expand emissions pricing to long-haul flights & international shipping
🟢 Help lower interest rates
In 'Splitting the bill' we found that if the Government removed some policy costs from electricity bills, it could save the average family £160, while pushing down on inflation.
Read here 👉 buff.ly/z69JDpL