Nesta, a research and innovation foundation, published its response on 3 February 2022 to the announcement of an increase to the energy price cap1. Andy Regan, Mission Manager in Nesta's Sustainable Future team, said the announcement would be "a cause for fear and despair" for many households across Britain1.
Regan set out the foundation's reading of the cause. He said the UK's energy price crisis is a global gas crisis, driven by geopolitics and bottlenecks across the energy system, which have all pushed up wholesale gas prices1. He added that the UK is more heavily exposed to these than most other countries in Europe1. The response did not give the level of the cap, the size of the increase or the date it takes effect; those figures are not reported in it1.
The response located the remedy in homes rather than in supply alone. Regan said the UK uses more gas for heating than for generating electricity, and that the best solutions are switching to low carbon heating, insulating homes, and continuing to generate more renewable energy1.
"The UK Government should retain its commitment to the Energy Company Obligation, push ahead with its plans to stimulate the heat pump market, and shouldn't blink on its plans to shift levies on energy bills from electricity to gas - even in the midst of this crisis."
Regan also said the government should recognise the cost and complexity of making the change to low carbon heat for households, and invest in innovative approaches to reducing costs, increasing confidence, and making the right choice for the long term the easiest choice in the here and now1. On affordability, he said fuel poverty campaigners have long talked about the choice between heating or eating, but the cost of both has gone up significantly in recent months1.
Why it matters for households
The cap sets the maximum a supplier can charge for default tariffs, so an increase to it flows through to what a household pays for each unit of gas and electricity and for standing charges. The energy bills and the price cap guide sets out how that mechanism works, and the price cap history records every level since 2019 and when the next is announced.
Nesta's argument is that exposure to wholesale gas is the channel through which a global market reaches a domestic bill, and that the UK's exposure runs through heating more than through electricity generation1. That framing matters for energy independence at the level of an individual home: a household that uses less gas for heat, or that draws its heat from a source other than gas, is less exposed to the wholesale price that Nesta describes as driven by geopolitics and system bottlenecks1. The wholesale prices guide explains the link between wholesale gas and retail bills, and energy bills and energy independence covers the wider question of what household-level independence means.
The response names three levers it says sit with government rather than with households: the Energy Company Obligation, support for the heat pump market, and shifting levies from electricity to gas1. Each affects what a household can access or what it pays, and none is within a household's own control. The Energy Company Obligation sits within the regulatory framework covered under regulation and policy.
What happens next
Nesta's response sets out positions rather than a timetable. It calls on the UK Government to retain its commitment to the Energy Company Obligation, to push ahead with plans to stimulate the heat pump market, and not to blink on plans to shift levies from electricity to gas1. No dates for those measures are given in the response1.