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Energy crisis – addressing rising costs and security concerns

The UK government announced additional measures in the latter half of December 2022 in an attempt to alleviate the ongoing cost of energy crises.

These new measures included:

  • the Energy Bills Support Scheme Alternative Funding. A one-off payment of £400 to consumers who do not have a direct relationship with a domestic energy supplier. Examples of this kind of consumer include homes on a heat network or private wire, off-grid homes and tenants who pay for energy through a landlord on commercial supply;
  • the Energy Bills Support Scheme Alternative Fuel Payments. A one-off payment of £200 to consumers who use alternative fuels such as biomass or heating oil to heat their homes; and
  • Additional support for households in Northern Ireland. A £600 one-off payment consisting of £400 under the Government’s Energy Bills Support Scheme Northern Ireland and £200 under the Energy Bills Support Scheme Alternative Fuel Payment, granted to all homes in Northern Ireland regardless of how they are heated.

These additional measures as well as those previously announced in relation to the energy crises are clearly short term in nature and come at considerable cost. More will need to be done to address the underlying causes of high energy prices in the UK (where possible) to ensure stability of both supply and prices.

In addition to the above measures, the UK government has also been taking steps to enhance the UK’s energy security, entering into an agreement with the USA (primarily focused on fostering a decreased dependency on Russia-sourced energy products and accelerating the transition to renewables).

In addition, the UK also entered into a framework agreement with the North Seas Energy Cooperation Forum. This agreement focuses on collaboration on the development of offshore renewable energy and grid infrastructure in the North Sea. The UK government has stated that such co-operation is expected to be essential to meeting the UK’s net zero commitment and for bolstering European energy security.

The Memorandum of Understanding with the North Seas Energy Cooperation Forum fulfils commitments in the UK-EU Trade and Cooperation Agreement, enabling the UK to work with North Seas Energy Cooperation members to develop renewables projects in the North Sea - specifically projects linking electricity interconnectors and windfarms. The countries involved include Belgium, Denmark, France, Germany, Ireland, Luxembourg, The Netherlands, Sweden, Norway and the European Commission.

The above agreements are part of the UK Government’s attempts to give effect to the British Energy Security Strategy issued in April 2022 but also to seek to address some of the underlying causes of the energy crisis. By creating a renewables dependent energy system with multiple points of connection to mainland Europe the UK will increasingly reduce its dependence on fossil fuel energy and thereby improve its control over both the supply and pricing of the energy consumed in the UK.

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