Energy efficiencies key to avoiding future price hikes - expert comment
Release Date 11 October 2021
On reports today (Monday 11 October) that energy price increases are going to have a big impact on industry as well as households.
Professor Jacopo Torriti, Professor of Energy Economics and Policy at the University of Reading, said:
"The UK Government has a couple of options in the short term. Extending the price cap to industry is one, but this was designed to protect residential consumers on standard variable tariffs who would face hardship from a sudden increase in their bills, not for wealthy corporations.
"The other option is to subsidise the cost of energy, as the Italian government has done by reducing some of the extra costs added to the energy bills of industrial consumers. However this would be hugely expensive and a difficult decision with the financial impacts of Covid-19 still being keenly felt.
"In the long term, an industrial policy that is more hands on in terms of promoting energy efficiency for energy intensive industries, such as steel, ceramics, glass, and chemical production, would make real sense. As would improving the electrification of industrial processes that currently use gas.
"Today we are hearing from the high gas demand industries. Soon we will hear from those experiencing not only energy price increases, but also shortages in labour because of Brexit. For instance, the food manufacturing industry making use of energy intensive ovens is already experiencing shortages in jobs which were filled by EU workers. The economy will face a season of energy and labour shortages, running into 2022.
"However, the outlook looks brighter for electricity prices from next winter up to 2030. This is thanks to higher penetration of renewables leading to cost reductions of about 14% per year, mostly from avoided generation investment."