- A major report by the Institute for Fiscal Studies (IFS) and LSE suggests British household energy bills could be reduced if the Government encourages the widespread adoption of flexible, time-varying tariffs.
- The study highlights that standard domestic tariffs currently fail to reflect significant fluctuations in generation costs, such as Scotland producing abundant, effectively free wind power while costly gas generators are used to meet peak demand in southern England.
- With the Government ruling out zonal pricing, researchers advocate shifting standard household tariffs to a time-varying footing by default, alongside offering targeted subsidies for heat pumps and solar panels based on regional generation costs.
- Financial incentives encouraging households to shift electricity usage to off-peak hours, such as charging electric vehicles during cheap periods, could drive down consumer bills and help ease ongoing cost-of-living pressures.
- Modernising the UK electricity system is deemed essential as balancing costs are forecast to double to £7 billion by the end of the decade, with report authors emphasising that long-term market efficiency is critical for vulnerable, low-income families.
IN FULL
Energy bills could fall if households use electricity at the cheaper times, report finds
