{"id":30674,"date":"2022-02-10T12:37:57","date_gmt":"2022-02-10T12:37:57","guid":{"rendered":"https:\/\/www.elixirr.com\/?p=30674"},"modified":"2025-10-31T10:46:23","modified_gmt":"2025-10-31T10:46:23","slug":"the-energy-crisis-looking-to-the-future","status":"publish","type":"post","link":"https:\/\/www.elixirr.com\/en-us\/the-energy-crisis-looking-to-the-future\/","title":{"rendered":"The Energy Crisis: looking to the future"},"content":{"rendered":"\n<p>The current energy crisis also poses consequences for stakeholders across political, economic and business spheres. In this <a href=\"https:\/\/www.elixirr.com\/en-us\/2022\/01\/07\/the-energy-industry-a-state-of-crisis\/\" target=\"_blank\" rel=\"noreferrer noopener\">three-part <\/a>series we\u2019ve explored the demise of Bulb and what it signifies for the energy industry as a whole, but what about the future?<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-crisis-continues\"><strong>The crisis continues<\/strong><\/h2>\n\n\n\n<p>The special administration process means that until Bulb\u2019s administrators are able to salvage the business, or find its customers alternate providers, the&nbsp;<a href=\"https:\/\/news.sky.com\/story\/bulb-on-brink-of-collapse-amid-government-talks-with-creditor-12475565\" target=\"_blank\" rel=\"noreferrer noopener\">Treasury must support Bulb<\/a>&nbsp;so it can continue to serve customers. How long this process will take is uncertain, as its conclusion likely relies on energy prices dampening. However, the company\u2019s administrators are targeting&nbsp;<a href=\"https:\/\/www.cityam.com\/bulb-energy-what-next-for-the-fallen-energy-firm\/\" target=\"_blank\" rel=\"noreferrer noopener\">a sale by April<\/a>, so until that point in time, it\u2019s taxpayers who will have to front the bill to fund the Treasury\u2019s propping up of Bulb. This will cost hundreds of millions, with some experts predicting this cost could run&nbsp;<a href=\"https:\/\/www.ft.com\/content\/39b3eacb-17a4-4404-8232-e22a512423b4\" target=\"_blank\" rel=\"noreferrer noopener\">into the billions<\/a>&nbsp;as more providers collapse in the upcoming months. The news of the 27<sup>th<\/sup>&nbsp;company to collapse, Together Energy (who serve&nbsp;<a href=\"https:\/\/www.theguardian.com\/business\/2022\/jan\/18\/bristol-energy-owner-is-latest-uk-supplier-to-go-bust\" target=\"_blank\" rel=\"noreferrer noopener\">176,000 UK households<\/a>), is a case and point that this problem isn\u2019t subsiding.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-a-sustainable-future\"><strong>A sustainable future&nbsp;<\/strong><\/h2>\n\n\n\n<p>More broadly, Ofgem\u2019s unveiling of the largest ever price cap increase, and recent calls for the removal of green levies that currently subsidise renewable energy efforts, are indicative of not only an industry in flux, but one now forced to operate through a short-term corrective lens. The consequence? Future efforts centered around the protection of consumers and the transition to sustainable fuels are at threat.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-financial-impact\"><strong>The financial impact<\/strong><\/h2>\n\n\n\n<p>Industry cries for the removal of the price cap were rejected by Business Secretary Kwasi Karteng. This was likely the correct decision, as to abolish the price cap would open the door to excessive pricing by energy companies. And, in the wake of COP26, it\u2019s undeniable that there is an urgent need for society to collectively move towards renewable energy, with the EU and US announcing a\u00a0<a href=\"https:\/\/www.bbc.co.uk\/news\/world-59137828\" target=\"_blank\" rel=\"noreferrer noopener\">partnership to cut methane<\/a>. Regardless of energy industry bosses alleging that higher prices would\u00a0aid their transition to renewables, allowing energy suppliers to set their prices and boost the revenue of the \u201cBig Six\u201d would send out the wrong message. Particularly following the collapse of the challenger supplier that had offered 100% renewable.\u00a0<\/p>\n\n\n\n<p>Instead, Ofgem has announced it will&nbsp;<a href=\"https:\/\/www.theguardian.com\/business\/2021\/nov\/19\/energy-price-cap-tweak-may-lead-to-faster-rises-in-household-bills\" target=\"_blank\" rel=\"noreferrer noopener\">adjust the price cap more frequently<\/a>&nbsp;than it currently does, particularly during abnormal times. The most recent of these adjustments was announced on the 2<sup>nd<\/sup>&nbsp;of February \u2013 a&nbsp;<a href=\"https:\/\/www.theguardian.com\/money\/2022\/feb\/03\/uk-households-face-record-54-energy-bill-rise-as-price-cap-is-lifted\" target=\"_blank\" rel=\"noreferrer noopener\">54% increase (\u00a3693 annual increase)<\/a>&nbsp;in the amount providers can charge consumers for default tariffs, with a&nbsp;<a href=\"https:\/\/www.theguardian.com\/money\/2022\/feb\/03\/uk-households-face-record-54-energy-bill-rise-as-price-cap-is-lifted\" target=\"_blank\" rel=\"noreferrer noopener\">further October increase<\/a>&nbsp;anticipated. This will ring alarm bells for consumers, especially given that Bulb\u2019s special administration regime means taxpayers will already be feeling the impact of the company\u2019s collapse as they support its continued operations. Were more suppliers to fail, this would be felt even greater. As per Ofgem\u2019s own&nbsp;<a href=\"https:\/\/www.ofgem.gov.uk\/about-us\/our-strategy-and-priorities\" target=\"_blank\" rel=\"noreferrer noopener\">organizational priorities<\/a>, it is important that industry pains aren\u2019t passed on to consumers via disproportionate price increases. And yet, a&nbsp;<a href=\"https:\/\/www.theguardian.com\/business\/live\/2022\/feb\/03\/cost-of-living-crunch-energy-bills-price-cap-uk-interest-rates-bank-of-england-business-live?filterKeyEvents=false&amp;page=with:block-61fbc97c8f0854a991e0605b#block-61fbc97c8f0854a991e0605b\" target=\"_blank\" rel=\"noreferrer noopener\">record fall in living standards<\/a>&nbsp;and <a href=\"https:\/\/www.theguardian.com\/business\/live\/2022\/feb\/03\/cost-of-living-crunch-energy-bills-price-cap-uk-interest-rates-bank-of-england-business-live?filterKeyEvents=false&amp;page=with:block-61fbb9948f08ed69ff281bf8#block-61fbb9948f08ed69ff281bf8\" target=\"_blank\" rel=\"noreferrer noopener\">25% of households falling into fuel poverty<\/a>&nbsp;are among the anticipated effects of their most recent adjustment. The government has been quick to respond with a&nbsp;<a href=\"https:\/\/www.bbc.co.uk\/news\/av\/uk-politics-60244051\" target=\"_blank\" rel=\"noreferrer noopener\">bundle of measures<\/a>&nbsp;designed to lessen the burden felt by consumers, including a&nbsp;<a href=\"https:\/\/www.telegraph.co.uk\/politics\/2022\/02\/03\/energy-bills-price-cap-announcement-key-points-affect\/\" target=\"_blank\" rel=\"noreferrer noopener\">\u00a39.1 billion energy bills rebate<\/a>&nbsp;aiming to provide households with a \u00a3200 bills discount and a&nbsp;<a href=\"https:\/\/www.telegraph.co.uk\/politics\/2022\/02\/03\/energy-bills-price-cap-announcement-key-points-affect\/\" target=\"_blank\" rel=\"noreferrer noopener\">council tax rebate<\/a>.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>A record fall in living standards and 25% of households falling into fuel poverty are among the anticipated effects of the new price cap<\/p>\n<\/blockquote>\n\n\n\n<p>However, the current workings of the energy industry facilitate an environment where providers and consumers alternate in suffering, and short-term government interventions do little to address this. The price cap rightly exists to protect consumers, but this shouldn\u2019t be to the catastrophic detriment of energy providers, as it has been in recent times.&nbsp;<a href=\"https:\/\/www.bbc.co.uk\/news\/business-60218323\" target=\"_blank\" rel=\"noreferrer noopener\">Over 30% of those working full time in the UK are struggling to pay bills<\/a>. Consumers are now being forced to choose between&nbsp;<a href=\"https:\/\/www.bbc.co.uk\/news\/business-60243463\" target=\"_blank\" rel=\"noreferrer noopener\">more food or a warmer home<\/a>. The rules, regulations and structures currently in place in the industry are in clear need of rectification.&nbsp;&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-other-industries-suffer\"><strong>Other industries suffer<\/strong><\/h2>\n\n\n\n<p>It is not just energy providers and their customers suffering from the energy crisis. Manufacturing, construction and agriculture are just some of the industries that heavily rely on energy. Inevitably, rising cost bases for companies in these industries will result in either reduced production and output or increased consumer prices. For instance, manufacturers that employ energy-intensive production processes have been hit hard by the increase in energy costs,&nbsp;<a href=\"https:\/\/www.pinsentmasons.com\/out-law\/analysis\/the-impact-of-rising-energy-prices-on-the-infrastructure-sector\" target=\"_blank\" rel=\"noreferrer noopener\">resultantly increasing their own product prices<\/a>. So, industries such as construction are bearing the brunt of both an increase in energy and material prices. The damaging widespread effects that the energy crisis is having, and will continue to have, are evident: it\u2019s imperative that the risk of such a situation occurring once again is mitigated.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-new-priorities\"><strong>New priorities<\/strong><\/h2>\n\n\n\n<p>Ofgem\u2019s changes to the frequency of price cap adjustments and introduction of more scrutinous assessments of companies seeking licenses to provide energy are steps in the right direction. However, the energy industry in the UK, and on a global scale, needs to be reshaped. Ultimately, the fact that the sharp increase in energy prices has had such detrimental and widespread effects reveals we\u2019re overly reliant on traditional energy forms. Not only that, we\u2019re inefficient in our use of them. So, the bigger issue facing the government is how to help society transition to the new order and facilitate the sustainable use of renewable fuels.&nbsp;<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>The detrimental and widespread effects of the energy price rise reveals that we&#8217;re overly reliant on traditional energy forms<\/p>\n<\/blockquote>\n\n\n\n<p>The need for an immediate change in the manner of our energy consumption is evident. Governments and financial markets alike have been taking action and there has been a resultant&nbsp;<a href=\"https:\/\/www.wsj.com\/articles\/energy-crisis-fossil-fuel-investment-renewables-gas-oil-prices-coal-wind-solar-hydro-power-grid-11634497531\" target=\"_blank\" rel=\"noreferrer noopener\">decrease in investments into fossil fuel production<\/a>. Furthermore, in 2021&nbsp;<a href=\"https:\/\/www.theguardian.com\/environment\/2021\/jan\/28\/uk-electricity-from-renewables-outpaces-gas-and-coal-power\" target=\"_blank\" rel=\"noreferrer noopener\">42% of the UK\u2019s electricity came from renewables<\/a>&nbsp;\u2014 a factor which, when combined with the&nbsp;<a href=\"https:\/\/www.irena.org\/newsroom\/pressreleases\/2021\/Jun\/Majority-of-New-Renewables-Undercut-Cheapest-Fossil-Fuel-on-Cost#:%7E:text=Renewable%20Power%20Generation%20Costs%20in,PV%20by%207%20per%20cent.\" target=\"_blank\" rel=\"noreferrer noopener\">cost of clean energy falling<\/a>, bodes well for our long-term future.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-reality\"><strong>The reality<\/strong><\/h2>\n\n\n\n<p>However, there is a central issue in the shift to sustainable energy. Namely, that (although growing) renewable energy is not yet able to meet our energy needs. The ongoing energy industry crisis aptly reflects the dilemma at play; how can we reduce the use of non-renewable energy sources while also meeting growing energy demands? Some would suggest the answer lies in incentivising energy companies to provide renewable energy, with policies such as the&nbsp;<a href=\"https:\/\/www.ofgem.gov.uk\/environmental-and-social-schemes\/energy-company-obligation-eco\" target=\"_blank\" rel=\"noreferrer noopener\">Energy Company Obligation<\/a>&nbsp;aiming to do just that. However, following the price cap increase and growing global demand for energy, the \u201cBig Six\u201d providers are being encouraged, rather than dis-incentivised, to rapidly meet this demand with non-renewable energy sources. Long term, this represents a lose-lose situation. The UK energy industry returns to the oligopoly of old \u2014 challenger providers collapse while the \u201cBig Six\u201d grow \u2014 and sustainability efforts are dashed.&nbsp;<\/p>\n\n\n\n<p><br>The surviving energy providers of this crisis should take learnings from the 27 providers that have regrettably collapsed. Short-sightedness and a lack of strategic planning can lead to catastrophic failures. Prioritizing short-term demand for energy via non-renewables should not diminish efforts to develop renewable energy infrastructure and better our long-term environmental impact. Companies need to take serious action, and governments should ensure they are continuously incentivised to do so.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The current energy crisis also poses consequences for stakeholders across political, economic and business spheres. In this three-part series we\u2019ve explored the demise of Bulb and what it signifies for&hellip;<\/p>\n","protected":false},"author":1,"featured_media":30676,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[116],"tags":[269,270],"related_service":[],"related_industry":[72],"class_list":["post-30674","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-energy","tag-renewable-energy"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.1 (Yoast SEO v27.1.1) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>The Energy Crisis: looking to the future - Elixirr - USA<\/title>\n<meta name=\"description\" content=\"Consumers will face significant increases to their energy bills this year, following the new price cap. 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class=\"wp-component-card edwp-component wp-component-card--resource            wp-component-card--link js-card-link\n        edwp-fade-in\">\n            <figure class=\"wp-component-card__image-wrapper\">\n                            <img width=\"2400\" height=\"1440\" src=\"https:\/\/www.elixirr.com\/en-us\/wp-content\/uploads\/sites\/2\/2022\/02\/website@2x.png\" class=\"wp-component-card__image\" alt=\"\" decoding=\"async\" srcset=\"https:\/\/www.elixirr.com\/en-us\/wp-content\/uploads\/sites\/2\/2022\/02\/website@2x.png 2400w, https:\/\/www.elixirr.com\/en-us\/wp-content\/uploads\/sites\/2\/2022\/02\/website@2x-300x180.png 300w, https:\/\/www.elixirr.com\/en-us\/wp-content\/uploads\/sites\/2\/2022\/02\/website@2x-1024x614.png 1024w, https:\/\/www.elixirr.com\/en-us\/wp-content\/uploads\/sites\/2\/2022\/02\/website@2x-768x461.png 768w, https:\/\/www.elixirr.com\/en-us\/wp-content\/uploads\/sites\/2\/2022\/02\/website@2x-1536x922.png 1536w, 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https:\/\/www.elixirr.com\/en-us\/wp-content\/uploads\/sites\/2\/2022\/02\/website@2x-1640x984.png 1640w\" sizes=\"(max-width: 2400px) 100vw, 2400px\" \/>            <div class=\"wp-component-card__preview-icon\">\n                <span class='edwp-svg '><svg width=\"47\" height=\"47\" viewBox=\"0 0 47 47\" fill=\"none\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\">\n<g>\n<path d=\"M23.4141 0.539062C36.1232 0.539183 46.4258 10.8416 46.4258 23.5508C46.4257 36.2599 36.1231 46.5624 23.4141 46.5625C10.7049 46.5625 0.402465 36.2599 0.402344 23.5508C0.402344 10.8415 10.7048 0.539062 23.4141 0.539062ZM23.4141 1.68945C11.3606 1.68945 1.55273 11.4974 1.55273 23.5508C1.55286 35.6041 11.3607 45.4111 23.4141 45.4111C35.4673 45.411 45.2743 35.604 45.2744 23.5508C45.2744 11.4974 35.4674 1.68957 23.4141 1.68945Z\" fill=\"currentColor\"\/>\n<path d=\"M19.2841 33.6992C18.9579 33.6986 18.6374 33.6111 18.3543 33.4454C17.7167 33.0759 17.3203 32.3585 17.3203 31.5797V15.8189C17.3203 15.0379 17.7167 14.3227 18.3543 13.9531C18.6442 13.7827 18.9735 13.6951 19.3078 13.6994C19.6421 13.7037 19.9692 13.7998 20.2548 13.9776L33.4237 22.0406C33.6981 22.2166 33.9244 22.461 34.0812 22.751C34.238 23.0409 34.3203 23.3668 34.3203 23.6982C34.3203 24.0295 34.238 24.3555 34.0812 24.6454C33.9244 24.9353 33.6981 25.1798 33.4237 25.3558L20.2527 33.421C19.9604 33.6017 19.6256 33.6979 19.2841 33.6992Z\" fill=\"currentColor\"\/>\n<\/g>\n<\/svg>\n<\/span>            <\/div>\n                        <\/figure>\n        <div class=\"wp-component-card__content edwp-row-load\">\n                                    <p class=\"wp-component-card__eyebrow\">\n                Articles            <\/p>\n                <a href='https:\/\/www.elixirr.com\/en-us\/the-energy-crisis-looking-to-the-future\/' class='wp-component-card__title'>\n            <h2>\n                The Energy Crisis: looking to the future\n            <\/h2>\n        <\/a>                                    <div class=\"wp-component-card__description\">\n                    The current energy crisis also poses consequences for stakeholders across political, economic and business spheres. In this three-part series we\u2019ve explored the demise of Bulb and what it signifies for&hellip;                <\/div>\n                                                    <div class=\"wp-component-card__meta\">\n                                            <p class=\"wp-component-card__date\">\n                            10 February 2022                        <\/p>\n                                                                <div class=\"wp-component-card__terms\">\n                                                                                                                                                    <div class=\"wp-component-tags edwp-component\">\n                        <div class=\"wp-component-tags__tag\">\n                Energy            <\/div>\n                <\/div>\n                        <\/div>\n                                    <\/div>\n                                                    <div class=\"wp-component-card__button-wrapper\">\n                    <button class=\"btn btn--link arrow wp-component-card__button\">\n                                                                            Read more                                                                            <span class='edwp-svg '><svg width=\"20\" height=\"20\" viewBox=\"0 0 20 20\" fill=\"none\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\">\n<g id=\"Lg\">\n<path id=\"Vector\" d=\"M1.12509 9.50162H15.8648L9.43259 3.06941C9.374 3.0113 9.3275 2.94216 9.29576 2.86599C9.26403 2.78981 9.24769 2.70811 9.24769 2.62559C9.24769 2.54307 9.26403 2.46137 9.29576 2.38519C9.3275 2.30902 9.374 2.23988 9.43259 2.18177C9.54971 2.06535 9.70814 2 9.87328 2C10.0384 2 10.1969 2.06535 10.314 2.18177L17.8151 9.6829C17.8737 9.74101 17.9202 9.81014 17.9519 9.88632C17.9837 9.96249 18 10.0442 18 10.1267C18 10.2092 17.9837 10.2909 17.9519 10.3671C17.9202 10.4433 17.8737 10.5124 17.8151 10.5705L10.314 18.0717C10.1975 18.1871 10.0404 18.2522 9.87641 18.2529C9.79414 18.2534 9.71259 18.2376 9.63643 18.2065C9.56027 18.1754 9.491 18.1296 9.43259 18.0717C9.374 18.0135 9.3275 17.9444 9.29576 17.8682C9.26403 17.7921 9.24769 17.7104 9.24769 17.6278C9.24769 17.5453 9.26403 17.4636 9.29576 17.3874C9.3275 17.3113 9.374 17.2421 9.43259 17.184L15.8711 10.7518H1.12509C0.959309 10.7518 0.800312 10.686 0.683084 10.5687C0.565857 10.4515 0.5 10.2925 0.5 10.1267C0.5 9.96093 0.565857 9.80193 0.683084 9.68471C0.800312 9.56748 0.959309 9.50162 1.12509 9.50162Z\" fill=\"#1D0F25\"\/>\n<\/g>\n<\/svg>\n<\/span>                                            <\/button>\n                <\/div>\n                                            <\/div>\n<\/article>\n","_links":{"self":[{"href":"https:\/\/www.elixirr.com\/en-us\/wp-json\/wp\/v2\/posts\/30674","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.elixirr.com\/en-us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.elixirr.com\/en-us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.elixirr.com\/en-us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.elixirr.com\/en-us\/wp-json\/wp\/v2\/comments?post=30674"}],"version-history":[{"count":3,"href":"https:\/\/www.elixirr.com\/en-us\/wp-json\/wp\/v2\/posts\/30674\/revisions"}],"predecessor-version":[{"id":58497,"href":"https:\/\/www.elixirr.com\/en-us\/wp-json\/wp\/v2\/posts\/30674\/revisions\/58497"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.elixirr.com\/en-us\/wp-json\/wp\/v2\/media\/30676"}],"wp:attachment":[{"href":"https:\/\/www.elixirr.com\/en-us\/wp-json\/wp\/v2\/media?parent=30674"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.elixirr.com\/en-us\/wp-json\/wp\/v2\/categories?post=30674"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.elixirr.com\/en-us\/wp-json\/wp\/v2\/tags?post=30674"},{"taxonomy":"related_service","embeddable":true,"href":"https:\/\/www.elixirr.com\/en-us\/wp-json\/wp\/v2\/related_service?post=30674"},{"taxonomy":"related_industry","embeddable":true,"href":"https:\/\/www.elixirr.com\/en-us\/wp-json\/wp\/v2\/related_industry?post=30674"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}