Winter demand falls as fuel bills rise: Understanding the energy impacts of the cost-of-living crisis on British households

Abstract

In October 2022 British households entered a heating season amidst a cost-of-living crisis and exceptionally high electricity and gas prices, squeezing household incomes and increasing rates of fuel poverty. This study analyses electricity and gas consumption in 5594 households from October 2022 – March 2023 using XGBoost counterfactual models trained on the same period in the previous winter. With survey data collected in early 2023 we investigate how consumption reduction correlates with energy-saving actions, household and dwelling characteristics, and indicators of underheating and fuel poverty.Our analysis showed that on average electricity consumption was 8.4% lower and gas consumption 10.8% lower than the previous winter (accounting for weather), saving consumers around £29/month. Despite this and a government subsidy, energy bills were still around £34/month higher than the previous winter (£158/month (median); £500/month (95th percentile)); price elasticity was -0.10 for electricity and -0.07 for gas consumption. Those in the top 20% of consumption reducers reported making much bigger changes to their heating practices, in particular heating homes for fewer hours than before and turning their thermostat down lower. We find evidence of greater fuel poverty and underheating among the greatest energy reducers, with implications for policy to better support the most vulnerable.

Capturing variation in daily energy demand profiles over time with cluster analysis in British homes (September 2019 – August 2022)

“…Counts reached a maximum of 12,020 homes with sufficient electricity data and homes with sufficient gas data. 4 Fewer homes have available gas data because not all homes have gas supplies, and not all homes that have electricity smart meters have gas smart meters, even if they have gas supplies (while all homes with gas smart meters do have electricity smart meters, as the latter are required for the gas meters to communicate with the national smart meter infrastructure). In total, 18,890,620 data points (each data point being a single 'home-fuel-day'a day of data for a given home and for a given fuel, either electricity or gas) were labelled with their demand archetypes across the full sample and three years covered.…”

“…This has enabled domestic energy demand to be investigated in greater detail, including change over time and for different household types [1,2]. Research has further investigated how demand has varied in relation to specific major events such as the COVID-19 pandemic [3] and the recent cost of living crisis [4], as well as some of the behavioural factors underlying such variation [5,6].…”

“…Slight is used here to signify under-or overrepresentation of less than 10 percentage points. The sizes of larger differences are stated in the text 4. Counts here and throughout this article are rounded to the nearest 10 for purposes of statistical disclosure control.…”