Data
License: All rights reserved. Credit: Greenpeace

Infographic: What puts up your energy bill?

Damian Kahya
License: All rights reserved. Credit: Greenpeace

 

Cost of gas 

The figures come from the energy regulator, Ofgem's "supply market indicator" for March (shortly after the last major changes in bills).

Between March 2011 and March 2012 bills rose by around £150. Around £100 of that was due to the higher wholesale cost of gas - which comes under wholesale cost of power in Ofgem's numbers.

As Ofgem explain here the wholesale cost is set by power companies buying and selling fuel and power on the market.

The wholesale cost of gas for heating, is quite clearly, set by international gas prices. But the same also applies to electricity. That's because the cost of gas feeds straight into the cost of power generated by gas, which in turn is the main variable in the price paid by utilities for all electricity. 

Because the price of gas is highly changeable the numbers are updated on a weekly basis - the latest one - doesn't yet include the bill rises from British Gas and SSE, but we'll update our figures when they come through next week.

It's worth noting that Ofgem compares your bill in any one month to the same month a year ago. Bills this time last year were also high so this year so far shows bills slightly lower. That is likely to be reversed with this week’s bill rises.

Renewables

So what about the cost of renewables?

The cost of renewables support isn't in the Ofgem document - instead it's merged into Vat, Transmission and Other costs (which also include the cost of efficiency schemes), so we got in touch with them directly. An Ofgem spokesperson told us:

"In 2004 ROCs accounted for 1.0% of a dual fuel bill. In March 2012,they account for 1.9% of a dual fuel bill."

Still following? In short that works out at about £25 a year. The Department of Energy and Climate Change (DECC) has published figures for 2011 which suggest that, that year, renewables added about £17 to the total bills. 

The two sets of data may not be completely comparable, but they suggest that the year on year increase due to renewables is around £8.

And wind?

Again this isn't broken down - either on your household bill or in Ofgem's statistics. It is, therefore, almost impossible to give an accurate answer.

The key point is that wind only accounts for a portion of the 'renewables' element of your bill. Initially far more of this was spent on things like biomass, and we're still paying for that today. 

Renewable technologies are paid for through something called "Renewable Obligation Certificates", you can work out roughly how much has been spent on any one technology in any one year, therefore, by working out how many have been issued to it.

Renewables UK looked into Ofgem's latest RO annual report and found the average household spends about £7.74 on wind power - you can check their calculations here.

Wait... you've missed solar

Solar attracted some of the most generous subsidies of any renewable technology - so surely it's a big factor driving up bills?

No.

Actually it’s so statistically insignificant that the Department of Energy and Climate change don't even quantify it.

Whilst the subsidy, paid through the Feed-in-Tariff may have been sufficient to promote a high initial take up the treasury severely limited the amount of money from bils which could be used to far less than that available for other technologies.

The result is that the whilst the FiT adds almost nothing to household bills DECC has still been forced to keep cutting the subsidies to solar power.

And margins...

Ofgem's rolling net margin figure reflects the amount of money, per year, per customer that it thinks is going to the energy supplier. In March it was about £60, then it fell to £45 - that's pretty low so now Ofgem think the suppliers will push it up to around £65.

On average, it seems to stay pretty constant but there are accusations that suppliers tend to put the price up when the cost of gas rises, and then keep it relatively high, when it falls - in order to profit on their margins. 

Update: efficiency

A few people have asked where efficiency measures are paid for in the average bill.

These are the schemes which allow energy companies to offer free insulation in your home and which, under the may be used to fund efforts to reduce fuel poverty or insulate solid walls under the government's Green Deal

Like the cost of wind the cost is included by Ofgem under the 'other' category.

In their assessment of the impact of meeting carbon budgets on bills the government's climate advisors, the Committee on Climate Change found that between 2004-10 policies to promote energy efficiency had added £45 to the average bill now accounting for around 5% of the average bill.

However, the CCC argued that without such measures bills for many households may have been higher still as they would have needed more gas to heat their homes.

This story has been updated since publication in response to the comments below. 


Comments Add new comment

That's a REALLY stupid place to put the license text.

I agree with Tim.. It's moronic. Please move the licence info to the bottom.

Tim and John, thanks for your comments. We work with a lot of photographers and like to be able to give them prominent credit for their work. Typically it is not a problem though I can clearly see how it is in the way in this instance. Unfortunately the license overlay is a feature of Greenpeace UK websites and not easy to turn off. We are using more infographics and will take this into account for the future, however this time it slipped through unfortunately.

License bar is annoying, but is just an overlay. If you righ+click (control+click for Macs, click+hold for iPad) and select 'open image in new window' then you can see it without the license bar.

Hiya - nice infographic/article. Slightly disappointed about this line though:

"Whilst the subsidy may be generous the pot of cash available is severely limited - that's why the government keep cutting the subsidies."

There never was a 'pot of cash' - FiTs is paid by energy companies. Any figures touted were actually estimates of the total to be paid by energy companies to those people who were on a Feed-In-Tariff (e.g. those who installed solar on their roof) 

The Chancellor seemed to want to convince everyone that this was a taxpayer subsidy, and that it had proved too popular and that the 'budget' needed to be cut... It seems he suceeded...

> "Whilst the subsidy may be generous the pot of cash available is severely limited - that's why the government keep cutting the subsidies."

To echo 'nommo', you are parroting disinformation that has been pushed by the anti-renewable propagandists. There is no "pot of money" needed for FITs. They do not work like that. FITs payments come from utility bills - the cost is spread amongst everyone and the more energy you use, the more you contribute to investment in renewables.

And quite clearly the government have kept cutting FITs for solar to protect profits for the fossil-nuke duopoly.

It's amazing that someone at Greenpeace could get this so badly wrong. This is basic propaganda from the pro-polluters that there is some imaginary pot of money.

P.S. It would be nice if you supplied a higher resolution image rather than the small, fuzzy one on this page.

Nommo and DavidCG thanks for your comments.

You are right that the FiT is not taxpayer funded but instead funded through bills - in the same was as CERT and the RO. 

However, through the Levy Control Framework (http://www.decc.gov.uk/assets/decc/11/funding-support/fuel-poverty/3290-control-fwork-decc-levyfunded-spending.pdf) and a few other mechanisms the Treasury has enforced limits on how much can be spent on each mechanism - if it goes above that limit the Treasury forces DECC to hand over the rest of the cash (which, of course, it can't do).

Therefore when take-up is higher than forecast DECC reacts by cutting the subsidy so as to prevent the overall spend being higher than allowed by the Treasury.

The government has so restricted the funding for this element of renewables support, by limiting the cash available for it, that it has a statistically insignificant impact on consumer bills - contry to what many believe. 

So the point here really is that allegations from those who oppose renewables that 'solar has driven up the cost to consumers' are wrong, partly because the amount that could be spent on solar was limited by the Treasury and partly because the subsidy for solar has been cut significantly.

There is more to say on this - about how solar can't be compared directly to power from the main grid because with domestic solar you save on transmission costs, and so solar grid parity is actually far closer than most think - but that's for a seperate post.

 

Hi Damian,

I understand how the system works and what the government has done, but the point is that you have described it as a "pot of cash". It is not. You are framing it in the way the pro-polluters want which is to suggest the subsidy is a certain amount of money that comes from government which comes from the taxpayer. The polluters want taxpayers to think they are subsidising renewables.

> "...the Treasury has enforced limits..."

That needs to be emphasised - that the government has set an arbitrary limit in order to prevent renewables taking too much from fossil-nuke profits.

David,

It's a problem if the story gives that impression, so I've changed the story. 

Thanks.

I was checking your comment about solar energy impacts on energy bills in the UK.
The DECC document you reference doesn't refer to specific energy types.
You appear to be making an inference in the information that doesn't actually exist in the document.

I think you need to find a more detailed source to back up your claim.

The word solar only appears in a footnote and that is a reference to solar water heating.
If I am wrong, can you point to the correct page, that supports your statement?

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