Energy Suppliers call for changes to electricity and gas levies

Environmental levies

Heating in focus

With attention turning to how to reduce the nation’s greenhouse gas emissions caused by heating, energy suppliers have raised the issue that without similar obligations being put on gas the decarbonisation process will fall behind.

The electricity network has been decarbonising quickly as support for renewable energy sources in the energy mix has increased with 2020 marking the first year that renewables overtook fossil fuels.

According to data from the UK Energy Research Centre, at the current rate of decarbonisation, it will take the country 700 years to achieve the government’s targets.

Technologies such as heat pumps have pushed to the fore as a possible solution, but suppliers believe that for greater progress to be made the cost of gas needs to be in line with electricity.

With electricity prices being high as a result of the obligations and levies the rollout of heat pumps is likely to be slow due to the high expenses to the consumer. Unless the technology falls in cost a heat pump rollout could fail.

Also read: What is the Renewable Heat Incentive Scheme?

A fairer balance

Some suppliers are calling for the government to move environmental levies out of energy bills altogether and instead charge for them via general taxation. They claim that this could save the average household £100 per year with up to 70% of households saving money.

“Renewables are becoming increasingly cheaper than fossil fuel generated electricity, but customers are still having to pay outdated levies and taxes on these green electrons.

"Indeed, we now have the paradoxical situation that green electricity carries ten times more taxation than gas. Rebalancing the taxes between gas and electricity would leave the average dual fuel bill as it is today but would lead to energy costs falling as we increasingly electrify society.

"Consumers paid these levies to invest in wind and solar generation - but now it's time for them to reap the financial reward for this investment," said Greg Jackson, CEO and founder of Octopus Energy.

There are bound to be some big shakeups to the energy supply sector over the coming months and years as the government presses on with its attempts to achieve NetZero by 2050.

Dyball Associates will keep you informed of the latest changes and our team of energy market consultants can guide you through the steps to enter the UK energy market. Whether you’re looking for electricity and gas systems or support on starting an energy supply company, Dyball Associates can help.

Further Reading

Scottish Power, Npower, EDF and Eon all announce energy bill hikes to maximum allowed by the Energy Price Cap

How to convince consumers to switch to a smaller energy supplier

Government slashes Green Homes Grant Voucher Funding due to low uptake

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