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How to reduce electric and gas bills

reduce bills

This guide is intended to provide general guidance only. It is not intended to give you advice on your personal financial circumstances. You should seek independent professional advice if you’re unsure about anything mentioned in this guide or what choices to make.

This guide will help you understand how to reduce electric and gas bills. There are eight simple steps which we'll guide you through. 

In 2013 the average gas and electricity bill in the UK was £1,316, more than double what it was a decade earlier. Despite the fact there has been a little respite in the last year the average home is still paying around £1,200 annually.

Fortunately it doesn’t have to be this way. With just a tiny bit of knowledge, and a few moments of your time, you may be able to save hundreds of pounds. In this guide we are going to look at eight different options for cutting your energy bill. Starting with the lowest hanging fruit.

Average energy use and spending in UK homes

1) Consider switching providers

They say a picture paints a thousand words. This one might help you save £260.

Savings from switching energy supplier

In recent years there has been a growing gap between the standard variable tariffs that most people pay for their energy and the cheapest fixed deals available. By 2015 gap had grown to more than £250 (see above).

According to OFGEM 60% of energy customers don’t recall switching energy providers. If you’ve been with your provider a while chances are you are on a higher rate. If you are paying anything like a £1,000 then getting a quick quote is a no brainer.

 



 

2) Pay with the right method

A surprising thing about the £260 potential saving shown in the last chart is that it doesn’t include the additional potential benefits of changing payment type. That’s right, you might save even more money if you’ve been paying by cash or by cheque. I’ve grabbed some figures from the Department of Energy and Climate Change that make this clear:

typical bill by payment type

This data suggests using a direct debit rather than prepayment or standard credit could save you £70 on gas and £50 of electric. Just to be clear these estimates are based on an ‘average house’ so if you use less energy the saving will be smaller, more energy and it will be greater.

Traditionally direct debit has always been the cheapest way to go, but in recent times some of the best savings can be made by managing everything online. Current Ofgem rules limit suppliers to cash bonuses for direct debit and online payment. So ideally you want to be using one of them.

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3) Take control of your heating

In the UK saving energy starts with heating. Two thirds of energy used by homes in the UK is for space heating and this accounts for half our bills. If you include water then heating it rises to two thirds of average costs.

People mostly think of their heating bills in terms of fuel costs but really what we are paying for is heat loss. The lower the heat loss the lower the energy use. Top rate insulation is the ideal way to lower heating bills but if you’re a renter, or can’t pay for more insulation, your best option is to take better control of your heating.

Basically the colder the average temperature in your house is the lower your heating needs are. We can use this knowledge to heat strategically.

heating degree days compared by base temperature

This decidedly geeky graph shows you how many ‘heating degree days’ there are for different base temperatures in a few of the world’s cities. It’s basically a proxy for heating needs. You can see London is cold and Rio doesn’t even need heating.

A heating degree day is a measure of the difference between inside and outside temperatures. It’s useful because it’s directly proportional to both conduction and ventilation losses, the source of heating demand in homes.

If you look at the chart you’ll see that reducing your thermostat setting by 1°C (1.8°F) cuts heating degree days, and hence heating bills, by about 10%. But that’s just the start. Here are three ways you can make this work for you.

  • Turn down the thermostat. Try lowering your thermostat setting by one degree and see how you go. If on occasion you feel cold just bump it up. Every degree will help.
  • Time your heating sensibly. You don’t need a warm house when you’re sleeping or if you’re at work. That will just increase heat loss. Time heating so that you wake up, and arrive home, to warmth. Let it chill out between.
  • Heat rooms differently. Some rooms need to be warm, like living rooms and bathrooms, whereas having a hot bedroom might just waste of energy. Use radiator valves to zone your rooms and save energy.

Just to be clear, we are not advocating living in a cold house. In fact the base temp doesn't go below 16 C (60.8C) precisely because that is the minimum recommended by the world health organisation.

David MacKay, the former Chief Scientific Advisor of the Department of Energy and Climate Change, has a classic example in his book of just how much is possible. He details the changes he made to cut his home heating energy use by 80%

4) Heat with a cheap energy source

One of the saddest things we see every winter on television is footage of people in fuel poverty using one electric heater. It’s shocking that the UK has fuel poverty at all, but doubly sad that people don’t realise just how expensive standard electrical heating is.

If like much of the UK you only use gas for heating then please skip ahead. If you ever use electricity please pay check out the graph below..

Energy cost comparison

Each type of heating fuel has a different costs and is converted to heat at varying efficiency. Divide the price of the fuel by the efficiency you get the cost of a unit of usable heat (pence/kWh). That’s what this graph shows, a comparison of heating costs.

Can you see the problem with standard electric heating above? It’s criminally expensive. In fact its is three and half times more expensive than a modern gas central heating system.

Anyone who is on the gas grid but struggling with heating costs would do better by turning off the radiators in bedrooms and halls and focus well timed heating on their living spaces. This way they can enjoy more than three times the heat for the same price.

For anyone not living on the gas grid heating economically is a challenge. Wood, kerosene and heat pumps are probably the best options though you’ll need to think carefully about upfront costs.

5) Draught proof your gaps

The cheapest way to reduce heat loss is by draught-proofing. It’s so cheap in fact that we’ve decided to include it here. The payback is so quick that it also makes sense for renters, unlike many insulation technologies.

If you’ve got foam and sealant hanging around then you can get to work. If not many a pound store stocks a half decent draft proofing kit these days and you can get the real deal for under a tenner. Not technically free, but close enough.

If you have leaky windows, doors, loft hatches, electrical fittings on walls, floorboards, pipework or joints these can be really easy fixes. It's really is as simple as blocking air gaps. Perhaps the simplest and most effective is the adhesive foam strips you get for doors. This also stops them banging when they close.

In terms of cost saving draught proofing isn’t going to save you hundreds of pounds but it really can improve comfort. A project as simple as sealing floor boards and adding a rug can really improve a room.

For a little more perspective on where a typical home’s heating energy goes here is a schematic for heat gains and losses:

Heating gains and losses by house type

Heat gains come from heating systems, the sun’s warmth and internal gains from things like appliances and body heat. Heat losses occur through conduction in the walls, floor, roof, windows and doors or via ventilation in the form of air leakage. Gains and losses must be balance thanks to the first law of thermodynamics. So more losses equals more heating need.

Ventilation is the air leaks we are talking about stopping with draught proofing, and they typically make up around 15% of heat loss in a UK home. The other major sources of losses are walls (35%), roof (20%), windows (15%), floor (10%) and doors (5%).

The amount of heat a home needs each year is largely dependent on how well insulated it is. On the left you can see that a Passive House requires just 15 kWh/m2a whereas a leaky old detached period home could require as much as 300 kWh.

For a typical UK home of 76 m2 (818 ft2) using gas this would mean keeping a 20℃ temperature in winter would cost roughly £1,000 for a leaky house, £500 for a modern house and just £50 for a passive house. For a little context the average UK home spends almost £700 on heating each year with a demand of nearly 200 kWh/m2a.

Since this post is only about free ways to save on energy we won’t dig into insulation technologies other than to point out that lots of forms of insulation are actually great investments, for example loft insulation and cavity wall insulation pay themselves back in just a few years. The reverse is true of windows and doors which take decades.

6) Slay your standby vampires

Standby electricity isn’t the biggest part of your utility bill but is probably costing you twenty or thirty quid a year. If you’ve got a lot of entertainment gadgets it may be more.

Again this is about priorities, you shouldn’t be focussing on your phone charger because it just doesn’t draw much power. Here is some US data to explain why:

Average standby for appliaces

This chart shows the average standby wattage of different appliances in the US. Mobile phones are at the bottom, and even then only if they are plugged in.

Look closely and you’ll notice that every product with more than 10W of standby power used is for entertainment. Take care of entertainment standby and you’re pretty slayed all the big vampires. In fact here in the UK a big chunk of standby is centred purely around the TV, DVD and set top box. If switching these things off at the wall isn’t handy consider trying a wall timer that can catch all of them.

7) Conserve energy by habit

No list of free energy saving tips can be complete without an attempt to channel The Good Life with some straight up energy conservation.

People often conflate energy efficiency and conservation but they’re not really the same thing. A simple example explains the difference.

Efficiency is swapping an old light bulb for a new LED (it creates the same light with less energy). Turning the lights off when you leave the room is energy conservation, you are simply using less light.

Efficiency is the techy to conservation’s is hippy if you will.

Here’s a few options for conserving energy. They won’t be everyone’s cup of tea, but they all add up:

  • Line dry clothes when possible
  • Wash clothes on cooler temperatures
  • Fill up your washing machine
  • Fill up your dish washer
  • Turn off lights when you leave rooms
  • Take more showers, fewer baths
  • Have shorter showers
  • Turn down your hot water tank (not below 60°C)
  • Boil only the hot water you need
  • Put lids on pots when you’re cooking
  • Defrost your freezer when possible
  • Open curtains in the day and shut them at night
  • Put on a jumper when you can
  • Cuddle up to a loved one

8) Look out for free kit

This one is last because these offers aren’t available to many people.

Free insulation and boilers for low income folks

The UK has an "Energy Company Obligations (ECO) scheme" which requires energy providers to provide services to people in certain income classes, and on certain benefits.

Basically if you get tax credits and have an income of £15,860 or less, or a benefits such as pension credit, you may be eligible for free loft or cavity wall insulation, or perhaps a boiler upgrade.

You can read more about the ECO scheme here.

Loans and cashback on energy saving products

The Green Deal is a government program that helps you borrow money upfront against future energy savings to pay for things like boilers, insulation, double glazing, heating controls . . .

There are more than 40 technologies covered. There have also been some additional cash grants provided though the program but these have been snapped up very fast. To make some sense of the scheme check out this video

Free Solar Panels

Even though the UK government has gradually reduced the feed in tariff for solar it is still possible to get free solar in the UK if you have a good roof space.

Whether you should get them is a much more difficult question. Essentially when you get free solar panels you are renting out your roof space for twenty years in exchange for free electricity when the sun shines.

If you get free solar you can typical expect to cut your electricity bill by about a third, something like £200 a year. Before doing so you should consider if this will affect your home’s value.

This company is the market leader in free solar.

Wrapping it up

That was a lot of information. In fact too many choice often results in inaction.

If you’re serious about cutting your bill try picking the tactic one you think will make the biggest saving with the least effort and give it a go.

For most people that will be either to:

Good luck with slashing your utility bill!!



OVO Energy rated 4.5/5 based on 1000+ customer reviews.

*Source and notes for graphs and table

Domestic electricity supply market shares

Source: Meter Point Administration Number (MPAN) data from Distribution Network Operators (DNOs)

Domestic gas supply market shares

Source: Gas supply point data provided by Xoserve

The rising price of loyalty to the Big Six

Source: Energylinx.co.uk, accessed 02/08/12 and every subsequent Thursday to the 12/02/2015, Data uses Ofgem standard consumption (profile 1) 2 for dual fuel users, averaged across all regions.

Variable tariff energy deals, Big Six and leading indipendants

Source: Tariff prices sourced from Uswitch Insight Portal, accessed on 11/9/15 and averaged across all regions. OVO supplier Energy indicates online discount and is for direct debit customers. Average Big Six SVT price is for direct debit customers but excludes paperless or online discounts. Estimated consumption of each house type based on Ofgem typical domestic consumption values 2015, low, medium and high users. (Profile Class 1 for electricity)

Fixed price energy deals, Big Six and leading independents

Source: Tariff prices sourced from uSwitch Insight Portal, accessed on 11/9/15 and averaged across all regions. OVO Better Energy includes online discount and is for direct debit customers. Average Big Six SVT price is for direct debit customers but excludes paperless or online discounts. Estimated consumption of each house type based on Ofgem typical domestic consumption values 2015, low, medium and high users. (Profile Class 1 for electricity).

Annual savings switching to OVO Better Energy

Source: Tariff prices sourced from uSwitch Insight Portal, accessed on 11/9/15 and averaged across all regions. OVO Better Energy includes online discount and is for direct debit customers. Average Big Six SVT price is for direct debit customers but excludes paperless or online discounts. Estimated consumption of each house type based on Ofgem typical domestic consumption values 2013, low, medium and high users. (Profile Class 1 for electricity).

Reasons for not switching supplier

Source: Ipsos MORI, Customer Engagement with the Energy Market - Tracking Survey 2013, p. 22

Average energy use and spending in UK homes

note: All figures based on 2013 data for gas and electricity use only. Total cost was £1.316 in 2013 and total energy use was 1.61 toe (18,724 kWh). This analysis excludes coal, oil products and bioenergy.

Sources: Energy - 'Energy consumption in the UK' (DECC 2014), Cost - Supply Market Indicator (OFGEM 2015)

Easy money? The potential savings from switching

Source: Energylinx.co.uk, accessed 12/02/2015. Data uses Ofgem standard consumption (profile 1) 2 for dual fuel users, averaged across all regions.

Typical bill payment type 2014

Source: Decc Quarterly Energy Prices, March 2015

Heating degree days compared by base temperature (C)

Source: degreedays.net

Energy cost comparison for heat: p/kWhth

Source: Nottingham Energy Partnership, March 2015

Heating gains losses by house type: kWh/m2a

Note: Typical values for Northern European country

Source: PHPP, own calculations

Average standby for appliances: watts (W)

Note: Each data point is the average power rating based on testing multiple products

Source: Lawrence Berkeley National Laboratory

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1Monthly cost - Representative monthly direct debit costs based on a non-economy-7, dual-fuel, medium user (3100 kWhs elec. and 12500 kWhs gas) paying in advance by direct debit, including online discount.  All rates correct as of 23/08/16, but may go up or down.

2Weekly cost - Representative weekly costs based on a non-economy-7, dual-fuel, medium user (3100 kWhs elec. and 12500 kWhs gas).  All rates correct as of 23/08/16, but may go up or down.

3Pay Monthly Savings are based on the average estimated annual costs for new PAYM OVO customers quoted through the OVO website (based on household and/or consumption information provided by those customers), compared to their current supplier and tariff. Comparisons taken between 01/01/2016 and 11/10/16. Incl VAT. Actual savings may vary according to your current supplier or tariff, individual tariff options, household information, consumption and location.

4Pay As You Go Savings are based on the average estimated annual costs for new PAYG OVO customers quoted through the OVO website (based on household and/or consumption information provided by those customers), compared to their current supplier and tariff. Comparisons taken between 01/01/2016 and 11/10/16. Incl VAT. Actual savings may vary according to your current supplier or tariff, individual tariff options, household information, consumption and location. 

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33% of your electricity comes from renewable sources: 33% renewable electricity as standard as of 1st April 2015. Renewable electricity is generated from wind, solar, geothermal, wave, tidal, hydro, biomass, landfill gas, sewage treatment plant gas and biogas.

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