On Tuesday 7 February, Nesta gathered experts from across the energy industry to discuss what might lie beyond the Energy Price Guarantee and how energy bills could be reformed in the long term to protect consumers and help deliver net-zero goals.

The Energy Price Guarantee was introduced by the government in October 2022 to reduce the costs of energy bills after the price of the soaring energy price cap, limiting what an average UK household will pay each year for gas and electricity. It’s set to run until 2024.

We were joined by a host of experts from across the industry, including Josh Buckland, Partner at Flint Global, Daisy Powell-Chandler, Head of the Sustainability practice at Public First and Sarah Merrick, CEO of energy cooperative Ripple Energy and Nesta’s Director of our sustainable future mission, Madeleine Gabriel. Each offered creative propositions for the future of energy bills and were met with a response from Dhara Vyas, Deputy Chief Executive of Energy UK and Rt Hon Chris Skidmore, Chair of the Net Zero Review.

Nesta's CEO Ravi Gurumurthy opened the discussion by reflecting on why we’re at a crucial moment to reform energy bills. While the Energy Price Guarantee was an improvised policy, government and industry now have 12 months to design and test new policy ideas to ensure energy policy meets the needs of consumers and UK security.

Josh Buckland, Partner, Flint Global

‘There’s no silver bullet for energy bills’

Josh Buckland, Partner at Flint Global, argued for a more thoughtful, long-term policy response that supports the transition to net zero, in the form of a new energy bill settlement for consumers. It would need to cover three key areas: how we pay for energy, how we ensure a fair price and how we protect vulnerable people. All options should be on the table: taking green levies off bills, putting a carbon tax on gas and buying electricity as wholesale to encourage more green energy. Educating consumers will also be key: we need to find ways to make consumers more aware of the energy they’re buying and how to make their energy use more efficient. Ultimately, there’s no silver bullet for energy bills but there are no shortage of options, Josh argued. It’s time for the government to step back and focus on a new collaborative settlement that works for consumers, industry and the net-zero agenda.

Madeleine Gabriel, Mission Director, A Sustainable Future, Nesta

‘It’s important that decarbonisation doesn’t get forgotten’

Nesta’s sustainable future Mission Director Madeleine Gabriel urged for a decarbonisation-focused approach to a new energy bill settlement. A decarbonisation-focused set of energy bill policies would need to focus on three key areas: more electrification, renewable energy use to avoid peak demand and energy efficiency. Madeleine brought forward a host of ideas including: committing to a green ratio which could bring energy prices closer to gas and encourage more heat pump uptake, introducing a carbon levy on gas and reforming standing charges so they’re variable and based on consumption. Madeleine highlighted that decarbonising power will result in cheaper electricity overall and ensuring that consumers across the income spectrum benefit from this will be key to reforming energy bills.

Daisy Powell-Chandler, Head of Energy and Environment Policy, Public First

‘What happens if you take the environment out of the equation?’

Daisy shared a recent report from Public First that explores the possibility of removing the environmental aims from energy policy and instead focusing on minimising cost and maximising energy security. The project created a model of the UK’s domestic energy system and found that UK energy independence by 2030 was feasible if the UK implemented renewable energy and additional energy infrastructure. Their research found that a renewable energy model would be around 80% cheaper than alternative models that relied heavily on nuclear and fracking for gas. This change would also insulate households from future price shocks and result in significant savings on energy bills for households in the coming years. Daisy estimated energy bill prices could be around £1,000 cheaper with a domestic energy model in future, even during a price shock. Daisy urged us to shift our focus from just reducing energy bills, to focusing on bringing capital investment into people’s homes so that they’re better protected in the long term. This would help us reach net zero earlier, and ensure that people’s homes are more comfortable with more affordable bills.

Sarah Merrick, Founder and CEO, Ripple Energy

‘Consumer ownership should be the future’

Sarah joined us to talk about an innovative energy initiative that’s already happening: collective energy ownership by Ripple Energy. Ripple Energy allows consumers to own a small part of large-scale wind farms and solar parks, which then power low-cost electricity for their homes. After paying a £1,700 upfront operating cost, current owners saved around £275 on their electricity bill this year and are estimated to save £800 in the year to come. Putting money into supporting infrastructure is far more beneficial in the long run than short-term price support. A collective renewable energy ownership scheme such as that offered by Ripple Energy encourages consumers to be more engaged with their energy usage and enables them to be more involved in the net-zero journey, alongside real tangible benefits. It also gives people more confidence to switch to renewables elsewhere, such as electric cars and heat pumps as their energy bills are more secure and less unpredictable in the present and future.

Dhar Vyas, Deputy Chief Executive of Energy UK

Dhara Vyas reflected on the proposals brought forward by the panel and stressed the need for policy and regulatory market reform. Dhara highlighted some common themes in all the proposals. The need for more and better data about people, usage and homes so we can target and help people more effectively. The role of people as energy consumers, as members of communities, as citizens and contributors to collective energy. His crucial point was about price and how we target fairness to ensure affordability is built into long-term views on energy.

Rt Hon Chris Skidmore, Chair of the Net Zero Review

Chris Skidmore closed the discussion, drawing on the recent publication of his Net Zero Review. Chris argued that although government and industry’s focus on energy policy tends to be quite granular, we now need to build out a wider narrative, bringing together the wide-spanning benefits of net zero into a targeted strategy. It’s also time to re-envisage the consumer, he argued. We need to create opportunities for consumers, shift the perception of energy as a service and not just as a product, better inform the public on energy bills and encourage behavioural change in a positive direction.

Nesta’s sustainable future mission is focused on making it easier for people to use clean, green sources of energy to heat and power their homes.