Energy price cap scrap would save households hundreds, analysis finds
A flexible system of energy pricing would reduce the price of electricity by 4p/kWh over the next 15 years, a new report from The Resolution Foundation finds.
A key measure under this system would include 'locational pricing', where households pay for energy according to costs in their area. This could reduce system costs by £3.7 billion a year, the report says, equivalent to £40 per household.
The most savings could be made from introducing more time-of-use tariffs, where households can pay cheaper energy rates depending on the time of day it is used. This would save an average of £160 per household by 2040 according to the report.
This measure would particularly benefit electric vehicle (EV) owners, researchers say, with an average £120 saving a year to be had compared to the price cap. This is because most EV owners will charge their vehicles overnight, when electricity would be cheaper.
EVs are rising in popularity in the UK, accounting for 19 per cent of all car sales in 2024. This is expected to increase quickly in the coming years as a ban on the sale of new petrol and diesel cars comes into force in 2030.
This demand is so great that EVs, alongside electric heating, are set to be the main drivers behind a 40 per cent increase in residential electricity use by 2035.
But this flexible electricity model could also come with higher price risks for households, as they would be more directly subject to volatility in the electricity market.
A report for Octopus Energy by FTI in February investigated how locational – or zonal – pricing could impact household energy costs across the country.
Their analysis found that average zonal wholesale prices in the north are lower than in the south, with those in London facing bills nearly seven times higher than those in Scotland if bills were mapped directly to zone-based wholesale costs.
Zachary Leather, Economist at the Resolution Foundation, said: 'Britain's net zero transition – in terms of both energy production and energy consumption – should be a cost of living win for consumers, but it will put more pressure on the electricity grid and could create more price volatility.
'Switching to flexible pricing for consumers could address these risks and reduce bills for everyone in the process.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
18 minutes ago
- Reuters
Gold flat as easing trade tensions offset support from weak dollar
July 24 (Reuters) - Gold prices held steady on Thursday after a sharp drop in the previous session, as easing trade tensions dented demand for safe-haven assets, overshadowing support from a weaker dollar. Spot gold was flat at $3,387.15 per ounce, as of 0138 GMT, after dropping 1.3% in the previous session. U.S. gold futures eased 0.1% to $3,492.50. "Yesterday, we saw gold prices seems like well might be building up for the next bullish run until the news came out on trade front, triggering some profit-taking," said Brian Lan, managing director at GoldSilver Central, Singapore. "We've seen the dollar has also weakened quite a bit, and of course, this also supports gold. So, I think this is a small retracement at this moment. We are, in fact, still quite bullish on gold." Signalling progress on tariffs, U.S. President Donald Trump struck a trade deal with Japan that lowers tariffs on auto imports. The European Union and the United States are nearing an agreement on a similar trade deal that would impose 15% tariffs on European imports, while waiving duties on some items, according to officials from the European Commission. Risk sentiment in the wider financial markets rose on the back of progress in trade talks and hopes that more deals could be in the offering. Offering support to gold, the U.S. dollar index (.DXY), opens new tab fell to a more than two-week low, making greenback-priced bullion less expensive for other currency holders. Investors also look forward to a rate decision from the European Central Bank due later in the day. Also on the radar, the U.S. weekly jobless claims numbers on Thursday and S&P Global's flash PMI data will be eyed to gauge economic health ahead of the Federal Reserve's monetary policy decision next week. Spot silver slipped 0.3% to $39.16 per ounce, platinum was steady at $1,411.53 and palladium dipped 1% to $1,265.50.
The Independent
an hour ago
- The Independent
Europe and China holding scaled-back trade talks with expectations low for major agreements
European leaders are meeting with top Chinese officials in Beijing on Thursday to discuss trade, climate change and global conflicts, with observers saying expectations were low for any solid agreements. The talks, initially supposed to last two days but scaled back to one, come amid financial uncertainty around the world, wars in the Middle East and Ukraine, and the threat of U.S. tariffs. Neither the EU nor China is likely to budge on key issues dividing the two economic juggernauts. European Commission President Ursula von der Leyen and European Council President António Costa will meet with Chinese President Xi Jinping and Premier Li Qiang to mark 50 years of relations between Brussels and Beijing. Von der Leyen and Costa were expected to challenge China's strategies on a number of issues during the talks. They include Beijing's position on Russian President Vladimir Putin's full-scale invasion of Ukraine; and China's trade imbalance with the EU, persistent cyberattacks and espionage, a near-monopoly of rare earth minerals and its human rights record in Tibet, Hong Kong and Xinjiang. The EU, meanwhile, has concerns about a looming trade battle with the United States. 'Europe is being very careful not to antagonize President Trump even further by looking maybe too close to China, so all of that doesn't make this summit easier,' said Fabian Zuleeg, chief economist of the European Policy Center. "It will be very hard to achieve something concrete.' There's also unlikelihood of a major breakthrough amid China's hardening stance on the EU, despite a few olive branches, like the suspension of sanctions on European lawmakers who criticized Beijing's human rights record in Xinjiang, a region in northwestern China home to the Uyghurs. China believes it has successfully weathered the U.S. tariffs storm because of its aggressive posture, said Noah Barkin, an analyst at the Rhodium Group think tank. Barkin said that Beijing's bold tactics that worked with Washington should work with other Western powers. "China has come away emboldened from its trade confrontation with Trump. That has reduced its appetite for making concessions to the EU," he said. 'Now that Trump has backed down, China sees less of a need to woo Europe.' China is the EU's second-largest trading partner in goods, after the United States, with about 30% of global trade flowing between them. Both China and the EU want to use their economies ties to stabilize the global economy, and they share some climate goals. But deep disagreements run through those overlapping interests. Division on trade China and the EU have multiple trade disputes across a range of industries, but no disagreement is as sharp as their enormous trade imbalance. Like the U.S., the 27-nation bloc runs a massive trade deficit with China — around 300 billion euros ($350 million) last year. It relies heavily on China for critical minerals, which are also used to make magnets for cars and appliances. When China curtailed the export of those minerals in the wake of U.S. President Donald Trump 's tariffs, European automakers cried foul. The EU has tariffs on Chinese electric vehicles in order to support its own carmakers by balancing out Beijing's own heavy auto subsidies. China would like those tariffs to be revoked. The rapid growth in China's market share in Europe has sparked concern that Chinese cars will eventually threaten the EU's ability to produce its own green technology to combat climate change. Business groups and unions also fear that the jobs of 2.5 million auto industry workers could be put in jeopardy, as well those of 10.3 million more people whose employment depends indirectly on EV production. China has also launched investigations into European pork and dairy products, and placed tariffs on French cognac and armagnac. They have criticized new EU regulations of medical equipment sales, and fear upcoming legislation that could further target Chinese industries, said Alicia García-Herrero, a China analyst at the Bruegel think tank. In June, the EU announced that Chinese medical equipment companies were to be excluded from any government purchases of more than 5 million euros (nearly $6 million). The measure seeks to incentivize China to cease its discrimination against EU firms, the bloc said, accusing China of erecting 'significant and recurring legal and administrative barriers to its procurement market.' European companies are largely seeing declining profitability in China. But the EU has leverage because China still needs to sell goods to the bloc, García-Herrero said. 'The EU remains China's largest export market, so China has every intention to keep it this way, especially given the pressure coming from the U.S.,' she said. It was unclear why the initial plan for the summit of two days was curtailed to just one in Beijing. War on Europe's doorstep The clear majority of Europeans favor increasing aid to Ukraine and more sanctions on Russia. The latest sanctions package on Russia also listed Chinese firms, including two large banks that the EU accused of being linked to Russia's war industry. China's commerce ministry said that it was 'strongly dissatisfied with and firmly opposed to" the listing and vowed to respond with 'necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises and financial institutions.' Xi and Putin have had a close relationship, which is also reflected in the countries' ties. China has become a major customer for Russian oil and gas, and a source of key technologies following sweeping Western sanctions on Moscow. In May, Xi attended a Victor Day celebration alongside Putin in Moscow, but didn't attend a similar EU event in Brussels celebrating the end of World War II. Von der Leyen and Costa will press Xi and Li to slash their support of Russia, but with likely little effect. Beyond Beijing and Washington Buffeted between a combative Washington and a hard-line Beijing, the EU has more publicly sought new alliances elsewhere, inking a trade pact with Indonesia, heaping praise on Japan and drafting trade deals with South America and Mexico. 'We also know that 87% of global trade is with other countries — many of them looking for stability and opportunity. That is why I am here for this visit to Japan to deepen our ties,' Von der Leyen said in Tokyo during an EU-Japan summit on her way to Beijing. 'Both Europe and Japan see a world around us where protectionist instincts grow, weaknesses get weaponized, and every dependency exploited. So it is normal that two like-minded partners come together to make each other stronger." Promoting ties with Europe is one third of Japan's new 2025 military doctrine, after sustaining defense links with the U.S. and investing in capabilities at home like missiles, satellites, warships, and drones. ___ Mark Carlson contributed to this report.
Times
an hour ago
- Times
Gaps in Len McCluskey's memory must be filled one way or another
Len McCluskey has questions to answer RAY MCMANUS/SPORTSFILE In his last major investigation for The Times before his untimely death, Andrew Norfolk, the reporter whose work exposed the grooming gangs scandal, turned his forensic eye to the Unite trade union. In a series of reports for this newspaper, Mr Norfolk revealed that a company owned by a friend of the union's then general secretary, Len McCluskey, was paid at least £95 million for the construction of a hotel and conference centre in Birmingham initially meant to cost £7 million. This week an independent report commissioned by Sharon Graham, Mr McCluskey's successor at Unite, showed the situation to be even worse. Ms Graham had asked Martin Bowdery KC, a barrister specialising in construction, to investigate the hotel project, for which Mr McCluskey was a vocal advocate. The inquiry concluded that the cost of the hotel had in fact ballooned to £112 million. That was £74.5 million more than its market value. As a result, Unite has had to wipe £66 million from its accounts. An audit accompanying the KC's report concluded that under Mr McCluskey's leadership there was a 'pervasive fraud environment' at Unite. The Serious Fraud Office (SFO) is pursuing its own investigation. Mr McCluskey, an avowed socialist and admirer of Jeremy Corbyn, never shy of voicing his opinions on Labour politics, clearly has serious questions to answer. Mr Bowdery's report claims that the union leader was flown to watch his beloved Liverpool FC in two Champions League finals, in Kyiv and Madrid, by the Flanagan Group, the construction firm alleged to have overcharged Unite by at least £30 million when building the hotel. The report also lists five other occasions on which the union leader was taken to watch Liverpool, enjoying matchday hospitality courtesy of the Flanagans, whom he described as 'good friends'. Mr McCluskey said that as far as he could recall he paid his own way. Unite officials and lawyers were uneasy about Flanagan, which the report said had a history of 'poor performance, delays [and] cost overruns'. Mr McCluskey is said to have overruled them. He denies doing so, and through his lawyers has denounced Ms Graham's inquiry as 'inaccurate, selective and highly misleading'. The ultimate judgment will be made by the SFO but Ms Graham believes there is enough evidence to support criminal action against two 'very senior' former Unite officials. South Wales police are undertaking an investigation involving alleged bribery, fraud, money laundering and tax evasion. It is not often that The Times agrees with Ms Graham but she is to be commended for her courage in taking on vested interests within a vast and powerful union of some 1.2 million members straddling the private and public sectors. She told this newspaper of the 'horrendous' attacks she endured from supporters of Mr McCluskey after promising to investigate the hotel project. She has described being 'followed home' and subjected to 'despicable online abuse'. There is much to criticise about Unite's positioning under Ms Graham's leadership, not least its intransigence over refuse collection strikes in Birmingham, but whatever her politics, she is at least committed to uncovering the truth. As Ms Graham says, multiple investigations suggest 'rank incompetence … or something else' during Mr McCluskey's reign. It now falls to the SFO to establish what that 'something else' might have been. It should expedite its inquiry as swiftly as possible. Unite pays £1.5 million a year to affiliate to the Labour Party and contributes significant sums to individual Labour MPs. It is too significant a political player to remain under a cloud of suspicion about its past integrity. The facts as they pertain to Mr McCluskey must be established, even if recalling some of them appears to be beyond our Len.
