Electric Rates Rise 20% – Tips to Lower Air Conditioning Costs

As the UK grapples with a 20% surge in electricity rates, households are feeling the financial strain, particularly during the warmer months when air conditioning becomes a necessity. With the average household energy bill rising to £1,849 per year—a 6% increase from the previous quarter—it’s imperative to find ways to mitigate these costs.

Understanding the Surge in Electricity Rates

​Despite the UK’s significant strides in renewable energy, achieving a record 50.8% of electricity generation from renewables in 2024, electricity prices remain among the highest globally. This paradox is largely attributed to the UK’s “marginal pricing” model, where the most expensive energy source, gas, sets the market price for all electricity. As a result, even though gas accounted for only 28.9% of electricity generation in December 2024, it determined the market price 98% of the time.

The UK’s electricity pricing model, which depends on gas, makes it vulnerable to international gas market instability. In 2024, the average cost of generating electricity using gas rose to £77 per megawatt-hour, an 80% increase from the pre-energy crisis average of £43/MWh between 2017 and 2020. This surge in gas prices has been a significant driver of the overall increase in electricity costs for consumers.

To address this issue, experts suggest reforms such as reducing the UK’s dependence on gas by expanding renewable and nuclear energy sources, implementing long-term fixed-price contracts for gas plants, and Introducing region-specific pricing to ensure electricity rates correspond with local grid pressures. By implementing these strategies, consumers are protected from gas price volatility and can benefit from more affordable electricity.

The Growing Demand for Air Conditioning

Air conditioning has traditionally been more prevalent in commercial buildings, owing to the UK’s temperate weather conditions. However, as summer temperatures continue to rise, residential demand for air conditioning is steadily increasing. Projections indicate that by 2050, between 5% and 32% of English households may adopt air conditioning, potentially increasing the summer peak load by 7gw.​

Image: https://d2e1qxpsswcpgz.cloudfront.net/uploads/2020/10/fig-one.jpg

This graph illustrates the projected increase in electricity demand due to domestic air conditioning usage in 2050, highlighting the significant impact on evening peak loads.​

The UK’s energy infrastructure must adapt to accommodate this growing demand. Strategies such as enhancing building insulation, promoting passive cooling designs, and encouraging the use of energy-efficient air conditioning units, particularly through responsible air conditioning installation, can help mitigate the impact. Additionally, aligning air conditioning usage with renewable energy availability, such as solar power during daylight hours, could optimise energy consumption patterns.

As climate change continues to influence temperature patterns, proactive measures are essential to ensure that the increasing reliance on air conditioning does not compromise the UK’s energy sustainability goals.

Strategies to Reduce Air Conditioning Costs

To combat rising electricity bills, consider implementing the following strategies:

1.  Optimise Thermostat Settings: Setting your air conditioner to around 24-25°C during summer months offers a balance between comfort and energy efficiency. Each degree increase can reduce cooling costs by approximately 6% to 8%.
2. Utilise Smart Thermostats: Smart thermostats allow for better control over your home’s temperature, enabling you to schedule cooling periods and avoid unnecessary energy consumption when you’re not home.
3.  Enhance Home Insulation: Insulation plays a critical role in energy efficiency by lessening the burden on air conditioning systems. Minimising air leakage and upgrading insulation can deliver considerable improvements in energy efficiency.
4.  Regular Maintenance: Ensure your air conditioning system operates efficiently by scheduling regular HVAC maintenance. This includes cleaning or replacing filters every six months and checking for any system issues.
5. Use Ceiling Fans: Ceiling fans can complement your air conditioning by circulating cool air, allowing you to set the thermostat higher without sacrificing comfort. 
6.  Implement Zoning Systems: Dividing your home into zones and cooling only occupied areas can lead to substantial energy savings. This approach ensures that energy isn’t wasted cooling unoccupied spaces.
7. Upgrade to Energy-Efficient Windows: Old windows can substantially undermine thermal efficiency by allowing excess heat into the space. Investing in energy-efficient windows helps maintain indoor temperatures, reducing the need for excessive air conditioning.
8.  Leverage Natural Ventilation: Opening windows during the early morning or evening helps circulate fresh air when outdoor temperatures are lower. This natural ventilation can reduce reliance on air conditioning.

Conclusion

With electricity rates climbing and the demand for air conditioning increasing, it’s crucial to adopt energy-saving measures to manage costs effectively. By optimising thermostat settings, enhancing home insulation, and utilising smart technologies, households can achieve significant savings while maintaining comfort during the warmer months.