The Department for Business, Energy and Industrial Strategy published a summary impact assessment for the Energy Bill in July 2022, covering 30 measures across three pillars: investment in clean technologies, system reform and consumer protection, and safety and security1.
The assessment puts the net present value of primary legislation in the Bill at around £300 million, against an equivalent annual net direct cost to business of around £9 million1. Of the 30 measures, only eight are expected to have direct impacts at primary legislation stage1. The largest single figure in the summary table is £490 million for the final stages of nuclear decommissioning, followed by £24 million for downstream oil resilience; the special mergers regime for energy networks carries a negative net present value of £180 million, which the assessment says sits alongside an avoided transfer from consumers to energy network companies of an estimated £600 million1.
For households, the assessment states that where consumer bill impacts have been quantified, secondary legislation is estimated to add a small average annual energy bill cost of less than £1 for dual fuel households out to 20301. It adds that several policies improve system efficiencies and so provide consumer savings in the long run, and that wider bill impacts from other policies are uncertain and depend on future funding decisions1. The assessment also notes that the energy price cap is the best safety net for 22 million households and that the Bill will enable its extension beyond 20231.
On emissions, the assessment estimates greenhouse gas savings of around 70 MtCO2e from measures on heat network zoning and the clean heat market mechanism, a social benefit of around £13 billion on the government's carbon values1. The clean heat market mechanism alone is estimated to save 19 MtCO2e in the central deployment scenario, corresponding to an estimated benefit of £3.6 billion, and incentivises the switch from gas and oil boilers to electric heat pumps1. The assessment says the policies will allow the meeting of the government's ambition to capture and store 20 to 30 Mt of CO2 per year by 20301.
On business costs, the assessment says all businesses are expected to incur familiarisation costs of £1,200 to £2,400 per business at primary legislation stage, with a separate figure of around £270 per business given for familiarisation cost only1. It states that small and micro businesses make up around 97 per cent of firms in the electricity sector and around 82 per cent in the gas sector1.
"Of the 30 policies included in this Bill, only 4 policies are expected to result in costs for small and micro businesses (SaMBs) at primary legislation stage"
Why it matters for households
The Bill's measures reach household energy use through several routes. The clean heat market mechanism is designed to shift heating away from gas and oil boilers towards electric heat pumps, which changes what a home uses for heat rather than only what it pays per unit1. The hydrogen heating village trial, which the assessment says the Bill will enable by 2025, involves only 1,000 to 2,000 properties and applies only to the gas distribution network operators conducting it, so it does not by itself change heating for homes generally1. Heat network zoning and the future system operator arrangements sit behind the meter, shaping how heat and electricity are planned and priced1. The assessment's own figures put the quantified average bill effect at under £1 a year for dual fuel households to 2030, while noting that savings from system efficiencies arrive later and that unquantified policies could move bills either way1. For a household weighing its own energy independence, the practical content of the document is that most of the cost and benefit figures are attached to secondary legislation that has not yet been laid, and the assessment says many policies have not quantified those impacts yet1.
What happens next
The assessment states that initial illustrative estimates suggest secondary legislation to implement the measures will have a significant additional net benefit to society, and that this estimate is subject to change because many savings will not be realised until secondary legislation stage1. It also states that four policies are expected to result in proportionately higher costs on small and micro businesses at secondary legislation stage while having no impacts at primary legislation stage1. No dates for laying that secondary legislation are given in the document1.
Sources1 cited
- Download, bills-api.parliament.uk