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How to reduce your energy bills by 50% in 2018

This chart shows you six steps an average UK home could take to reduce their energy bill by 50% in 2018. Although not all of them are easy, or likely to be something for you, understanding each option can help you decide the best way for you to cut your own bills. And while that might not mean halving your bill it is reasonable to expect to lower your energy bills and save a few hundred pounds each year with a few smart changes.

In this guide we’ll explain the data behind how each of them could work for you.

How to lower your energy bills

Step 1: Switch to a better tariff

Energy tariffs in the UK are very much divided into two categories. Competitive fixed rates for people prepared to switch providers and pricey variable tariffs for people that stick with their home provider (the local company following privatisation).

The graph above shows you the type of savings someone switching from the average variable tariff to OVO’s Better Energy tariff might generate. Obviously the potential saving varies considerably based on how much energy a home uses. And in reality you won’t know how much you might save until you get a quote.

Step 2: Manage your heating system

Three quarters of all gas used in UK homes is for space heating. In the graph above I’ve calculated how the average internal temperature affects the typical home’s gas heating bill. Each degree colder your home is on average will save roughly 10% of what you spend on gas for heating. Of course you don’t want to be colder.

There are three mains ways you can manage your heating system to reduce bills.

Step 3: Improve your insulation

Although controlling your heating intelligently is a clever way to cut costs it only works by lowering temperatures in your home (at strategic times). Improving your home’s insulation is different, it results in you getting more comfort for every pound you spend on energy. And better comfort is truly valuable.

In this graph I estimated the heating bills for homes of varying insulation standards. The $416 bill in the middle is what the average home spent on gas heating in 2015. A poorly insulated period property could be double this or more, while the best insulated homes in the world, passive houses, might use just £49 a year to maintain warmth.

The most cost effective ways to shift your home to the left on this chart are the addition of loft insulation, cavity wall insulation and draught proofing. Improving insulation levels to reach the ‘Low’ standard requires more attention to things like thermal bridging and airtightness.

Step 4: Control hot water use

Water heating is responsible for about 10% of the average home’s energy bill, or £114 each year (see below). A significant share of this meets our basic water needs like showering and washing up, so while you can save some money by using water carefully it shouldn’t be your first priority.

 

Unless you are currently pretty wasteful with your hot water or are using an expensive heating fuel like electricity you probably can’t expect to save more than £30-40 by controlling hot water use.

Here are some basics options that can help:

Step 5: Buy more efficient appliances

The typical UK home spends around £500 on electricity each year, a little over a hundred less than it spends on gas. Most households use gas for heating and some for cooking but electricity is used for a number of different purposes.

The following chart gives you a rough breakdown of how the typical UK home spent money on electricity. Around £63 is spent on a standing charge before you even use any energy and the big users are fridges and freezers, gadgets, lighting and clothes washing.

In the last ten years there have been big improvements in technology and efficiency standards that make saving electricity easier. This is particularly important when you go to replace appliances. Here are some options:

Step 6: Behaviour change

If you are really serious about cutting your bill then the final link is to develop a few simple habits that can save you money. These are particularly interesting, or even big wins in terms of money, but every little helps.

Here is a chart describing some options and what they might save you.

The easiest win for most homes is to tackle standby. The vast majority of standby in the UK is associated with entertainment (set top boxes, TVs, DVRs). Putting all of these onto a single switch and turning them off each night can often save £35 a year.

Drying your clothes on a line is the other big win, simply because clothes dryers are such big energy users. Then it's just common sense things like washing at lower temperatures where practical, turning lights off or filling the kettle only as much as you need.

A final checklist to slash your energy bills

Here is a final checklist to sum up your best options for saving: