How to reduce your energy bills by 50% in 2016

how to reduce your energy bills

This chart shows you six steps an average UK home could take to reduce their energy bill by 50% in 2016. 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

reduuce energy bill switching suppliers

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

How heating bills vary

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.

  • Reduce the thermostat setting. This can be useful if you have it above 20C but beyond that it is a limited strategy as no-one wants to be cold all the time.
  • Time your heating efficiently: During the week most homes only need warmth in the morning and the evening. Heating unused space is a waste.
  • Zone your heating intelligently: Spare bedrooms, hallways, dining rooms and storage areas need less heat. Focus your warmth where you enjoy it most

Step 3: Improve your insulation

How heating bills vary

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.

breakdown of a uk gas bill


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:

  • Heat water with gas if possible
  • Use a timer and jacket if water is stored
  • Set your thermostat at 60-65°C
  • Consider a low flow showerhead
  • Take fewer baths and shorter showers

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.

breakdown typical electricity bill

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:

  • Switch to LED light bulbs
  • If you replace your TV get an LED screen
  • Get A rated fridge or freezers if replacing
  • Get A rated washing or drying machines
  • Opt for mobile computing if sensible

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.

electricity savings from behaviour changes

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:


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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 22/11/2017, 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 22/11/2017, but may go up or down.

3Pay Monthly Savings claims: Saving based on the estimated annual cost of OVO Two year fixed tariff for a non-economy-7, dual-fuel, medium user (3100 kWhs elec. and 12500 kWhs gas) paying monthly in advance by direct debit, including online discount. Comparisons made against the average of the Big 6 standard variable tariffs with equivalent features. All rates correct as of 22/11/2017.“The Big 6” are British Gas, Scottish Power, SSE, Npower, E.ON and EDF.

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.

3% interest: Calculated at 3% per year for customers paying by advance direct debit.  The OVO Interest Reward is paid monthly based on   number of days in credit and the amount left in your account after you’ve paid your bill,  and the credit balance on which you can earn the OVO Interest Reward is capped. Terms apply:

95% of new customers save when switching to OVO: Savings based on the average estimated annual costs for all new OVO customers quoted through the OVO website, compared to their current supplier and tariff. Comparisons taken between 01/05/2016 and 11/10/16. Incl VAT.

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