How Long Will the Energy Crisis Last?

✔ The energy crisis will last until at least 2024

✔ 6.7 million UK households are already in fuel poverty

✔ Investing in green energy is the only way out of this crisis

The global energy crisis has been disastrous for the UK.

6.7 million households have now been pushed into fuel poverty – meaning 24% of the population have to drop below the poverty line in order to heat their homes.

Rising global demand for gas and other alternatives to coal was already creating a worldwide gas shortage – and then Russia invaded Ukraine.

UK homes rely on gas more than most, and with the cost of electricity also tied to gas for now, energy bills have soared to their highest level in recorded history.

We’ve investigated how long the energy crisis will last in various scenarios, what could bring it to an end, and what the government should do to tackle its effects.

How long will the energy crisis last?

The energy crisis will last until at least 2024.

In January 2022, British Gas owner Centrica’s CEO Chris O’Shea told the BBC that “high gas prices will be here for the next 18 months to two years”.

That was before Russia invaded Ukraine, and Europe moved away from Russian energy – which in turn prompted Russia to limit its energy supply to the continent.

This exacerbated an already perilous situation for the UK, which had low levels of gas storage and was heavily relying on European nations who got much of their energy from Russia.

With global gas supplies still unable to properly meet demand – and with Russia still at loggerheads with the international community over its illegal invasion of Ukraine – the energy crisis may well continue past 2024.

The Centre for Economics and Business Research’s deputy chairman Douglas McWilliams has said that “unless the Ukraine situation resolves itself, prices are likely to be high but falling for three or four years.”

And Shell CEO Ben van Beurden has warned: “It may well be that we have a number of winters where we have to somehow find solutions through efficiency savings, through rationing and a very, very quick buildout of alternatives.”

We’ve given our own thoughts on when we think energy prices will go down.

What could end the energy crisis?

There are several actions that could ease and eventually end the energy crisis.

All of these would be complicated and difficult to execute, but we’ll need one or a combination of the following steps to escape this awful quagmire.

Russia pulls out of Ukraine

If Russia ceases its illegal invasion of Ukraine, we may see an earlier end to the crisis.

Either way, sanctions on Russia are likely to continue for a while anyway, as Putin’s regime has become a pariah state that must be stopped from further aggression.

But if and when Ukraine forces out the invaders, you’ll probably see Europe buying Russian gas before too long.

Unfortunately, the war doesn’t look like it’ll end any time soon.

Europe goes green to end its reliance on Russia

Europe as a whole has been attempting to create an energy mix that doesn’t include Russian oil or gas since near the start of the invasion.

This will likely be a lengthy process, but the best route is to commit to developing renewable energy sources.

This will cut our reliance on Russian oil and gas, provide a way for us to reach net zero emissions, and help us to achieve energy independence.

Sarah Brown, a senior analyst at think tank Ember, has said: “The argument that renewables are less reliable, that’s blown out the window.

“Any argument that they could possibly be more expensive has been blown out the window. The argument that fossil fuels offer security of supply? Gone.”

We must invest in solar energy, wind power, geothermal energy, and hydropower to find a long-lasting solution to this crisis.

That’s something almost the whole of the UK can agree on, as our 2023 National Home Energy Survey showed — 78% of Brits want the UK government to invest in more renewable energy.

The UK nationalises its energy companies

As the energy crisis has worsened, an increasing number of people have called for the government to take over our energy supply – and it’s reached a tipping point.

73% of the public – including 72% of Conservative voters – now support nationalising energy companies if they can’t offer lower bills, according to recent polling.

Most estimates state that it’d cost around £2.8 billion to take over the five biggest energy companies – far less than the projected £4 billion it’ll ultimately cost the government to bail out Bulb.

However, despite the plan’s widespread popularity, there seems little appetite in Prime Minister Liz Truss’s government to take this step.

How will the energy crisis affect your bills?

Fortunately, the government has introduced the Energy Price Guarantee, which has fixed the average three-bedroom household’s annual energy costs at £2,500 for two years.

Combined with the £400 Cost of Living Support Package, the typical home will only see a 6.5% increase in its bills from October to March – though this will become a 27% hike when the support runs out in April.

This price rise will send hundreds of thousands more households into fuel poverty, and cause suffering for millions more.

Between now and October 2024, the government must find a way to end the crisis, or face having to freeze energy costs again – a policy that’s already set to cost the taxpayer more than £100 billion.

Is it worse for the UK than other countries?

Yes, UK households have been particularly badly affected by this crisis.

Energy costs are simply higher here than they are in Europe.

On average, European countries pay 21p per kWh for electricity, and 6.8p per kWh for gas, according to the European Commission.

So if you lived on the continent, you’d be paying – on average – 38% less for electricity and 34% less for gas than we do in the UK.

It doesn’t help that the UK only has enough gas in storage to generate 9.9 terawatt hours (TWh) of energy – 17 times less than Italy, which uses a similar amount of gas per year.

And when you consider that 85% of households in this country rely on gas boilers, it makes sense that UK homes have suffered more than our continental counterparts.

What should the government do?

The government should support all households who struggle because of these horrendously high energy costs.

Fuel poverty has hit millions of households: 13% in England, 18% in Northern Ireland, 25% in Scotland, and 12% in Wales, according to government reporting.

That’s outrageous for one of the richest nations on Earth. Fuel poverty shouldn’t exist here.

After providing sufficient support, the government must engage in a far-reaching programme to insulate homes and develop green sources of energy.

This would lessen our overwhelming reliance on gas, which would cut our energy bills as well as the country’s carbon footprint.

A large onshore wind farm can be built in six months, at a much lower cost than a nuclear power plant – so there’s no excuse.

In the past two years, taxpayers have stumped up £10.7 billion simply to safely decommission nuclear power plants.

For that ridiculously high amount, the government could fund the installation of enough wind turbines to power 2.6 million homes or put solar panels on two million three-bedroom homes.

The solar move alone would save those households a total of £1.15 billion per year, meaning the investment would pay off completely in 9.3 years.

That’s not even accounting for the extra 2.6 TWh of green electricity it would funnel to the grid – enough to provide electricity to 900,000 homes every year.

If the government bucked the habit of more than a decade and took decisive, meaningful action today to insulate homes and fund renewable power production, we could avoid future energy crises.

That, unfortunately, feels like a pipe dream – and even if the government made all the right moves now, it will still be too late for millions of people in fuel poverty.

Summary

It hasn’t always been like this. From December 2018 to March 2022, domestic energy prices were stable and relatively low.

The average three-bedroom UK household paid £1,170 per year for gas and electricity, and this amount only ever varied by around 10% from this level in any given six-month period.

But we exist in a different reality now – one in which Europe’s main supplier of gas and oil is illegally invading a neighbour, there’s a global shortage of gas, and households all over the UK are suffering.

The government must keep its Cost of Living Support Package going past April 2023, and must commit to rapidly building renewable energy sources. It’s the only way.