Saturday, 8 December 2012

Factors driving your energy bills up - and down

I found a new report recently - NEED (National Energy Efficiency Data Framework) which has statistics derived from a sample of actual electricity and gas bills from around four million households in England, between 2005 and 2010. The main purpose of the analysis is to evaluate the impact of energy efficiency measures such as loft insulation and installing a new boiler. However, I have been looking at how our energy use varies between households and over time. NEED shows variation between households by factors including dwelling size, region and household income. The impact of region is surprisingly small even for gas bills - the mean gas usage in 2010 was least in the South West (13,400 kWh/year) as you would expect but greatest in London (15,600) though Yorks and Humber was not far behind (15,400 kWh/year). I would have expected a greater difference given that there is a 38% difference in heating requirement between SW and NW [1]. Size and household income are much more significant factors as shown in these charts.
The left hand axis for all these charts is kWh/year. You can check your bills to see where you come in.

Energy Use by region

There is very little variation in gas or electricity bills due to region.

Energy use by Income

Income has a similar effect on both gas and electricity bills and smaller than you might expect: the leap from households earning £15,000-£20,000/year up to £60,000-£65,000 is a factor 4 in income but less than 50% more in energy bills

Energy use by Dwelling Size

Dwellings with four bedrooms use on average 70% more electricity and 160% more gas than one bedroom dwellings. The effect of home size is almost linear for gas which suggests that larger dwellings are heated to the same degree as small ones.

The most important factor is clearly size but there is a lot of variation between dwellings of similar sizes. The next charts show how much. The red line marks the 50% mark so 50% of households are above and 50% below. The blue lines are the quartiles so 50% of the households are between those bands. There is more variation in the electricity bills than in the gas: for one bedroom dwellings, the upper quartile gas bill is twice the lower one but the electricity bill varies by a factor of 3.

There are also more extreme households (not shown in the charts): for electricity the top 5% of 1 bedroom households use 8900 kWh/year which is 4 times the median and the bottom 5% use only 600 kWh/year which is a bit less than a third. At the top end there will be households using electricity for heating though 88% of households are centrally heated with something other than electricity [2]. For gas the top 5% use 2.4 times the median but the bottom 5% use only 1/7th - which suggests some households are economising hard on heating but not so much on electricity.

Range of variation of electricity and gas usage by dwelling size

That theory is also born out by these last 2 charts which show the change in electricity and gas consumption since 2007. In that time gas prices have risen by 28% and electricity by 18% [1]. I chose 2007 partly because the weather was very similar to that in 2010, at least in overall heating demand. However, I have applied a small adjustment to the gas bills for 2010 for a better comparison.

Mean energy use by income in 2007 and 2010

*2010 bills adjusted slightly for weather
Electricity consumption reduced by 5-6% across all income levels. Gas consumption reduced by  16% in the poorest households bit only 11% in the high income households.

As you can see, we have slightly reduced our electricity consumption a little across all household income levels. For gas however we have done better with an overall reduction of about 16% at the low income levels reducing to 11% for the wealthiest. It is hard to say how we have achieved these savings in gas use. Some are undoubtedly due to installing heating efficiency measures and since there have been lots of subsidies targetted to help low income households it may be that they have been effective. From the NEED report, typical savings from a new condensing boiler are around 12%, from cavity wall insulation around 10% and from loft insulation about 2% (but the latter may be an under estimate because NEED only knows about professionally installed insulation and lots of people do loft insulation DIY).

However, some of the gas savings are certainly due to the residents taking zero cost measures such as turning down thermostats or reprogramming the heating timer to reduce the hours of heat. This is an efficiency measure too, if the savings are from unnecessary heating but for some this could be a loss in comfort.

All households have reduced their energy use for both gas and electricity but we can only speculate as to why. Money is less likely to be a concern at the higher income levels, but from my experience talking to a range of people, there is widespread concern about carbon emissions. Savings are bigger for gas than for electricity, perhaps because it is easier to reduce gas consumption without changing your habits. It is easier to do a bit of draught stripping or lower the thermostat than reducing your TV watching or run the washing machine less often. Even the poorest households have only reduced their electricity use by about 5%. However, with such a huge variation between households it goes to show that it is possible to use less, if we really want to, especially at the top end.

Research conducted in many countries often finds that comparison with neighbours and friends is a good way to motivate people to use less energy. DECC asked Ipsos Mori to conduct a survey to see how we in the UK would react to having a 'typical usage' benchmark provided on our bills [4] They concluded that some households would find this helpful and they would like the benchmark to be specific to their local area which suggests that we Brits also like to compare ourselves with our neighbours first. However, the NEED data shows that other factors are far more important in setting a credible benchmark for average use.

[1] Based on 20 year average degree days to base 15.5 C from Vesma
[2] Based on average fuel price index for all of 2007 and all of 2010 from UK National Statistics
[3] From Great Britain's housing energy fact file from DECC 96% of homes are centrally heated and only 8% of those are all electric.
[4] Empowering Households - Research on presenting energy consumption benchmarks on energy bills Undertaken by Ipsos MORI for DECC

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