Care Sector Energy Price Outlook: 2025-2030

The Care England “Care Sector Energy Price Outlook: 2025-2030” article provides advice for the care sector on mitigating energy cost increases in the coming years, such as using fixed-price energy contracts, combined energy procurement, and solar energy installations, and outlines ways in which energy consumption can be reduced. 

The article looks at the increasing electricity consumption and the challenges of the UK’s electricity infrastructure and rising energy costs experienced by the care sector along with the challenges faced by care providers, given the UK’s dependence on gas for electricity generation and the impact of limited gas storage and reliance on imports.  

 

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Over recent years, the care sector has faced a significant rise in energy costs, adding to the increasing pressures on budgets. This comes at a time when care providers are about to be impacted by the current government’s policy to increase employers’ national insurance contributions and lower the threshold, adding further significant costs to fragile care provider balance sheets. 

Here, we want to briefly look at what is driving cost pressure and how care providers can mitigate the impact and avoid a repeat of the devastating 2022 energy price rises on care services. 

The best way to reduce energy costs is to use less energy. However, the growing demand for electricity in modern care settings and a national move away from fossil fuels such as gas, particularly in care homes, can be partially offset with advancements in technology such as solar panels, LED lighting, and energy-efficient appliances. These will all help reduce consumption in some areas. Zoning, switching off lighting, not heating unused areas, closing windows and curtains, adjusting timers, increasing insulation, and closing doors are also suggestions to help control energy costs. However, these measures can quickly be wiped out by spikes in the energy market driven by forces outside the control of any care provider. 

UK’s Dependence on Gas 

The generation of UK electricity remains heavily reliant on natural gas, which is sourced via pipelines and Liquefied Natural Gas (LNG) imported by specialist ships. Gas is the main source of electricity generation in the UK, particularly during periods of low wind and cloudy days, as the UK’s renewable energy sources cannot always meet demand. 

Gas consumption fluctuates dramatically, sometimes hourly, creating significant stress on the country’s gas storage capacity. The UK has much lower gas storage than many European countries, with only about 12.5 days of storage compared to Germany’s 90 days, France’s 102 days, and the Netherlands’ 122 days. This means the UK gas price is heavily dependent on market price fluctuations. 

As gas storage depletes, the UK faces challenges in securing additional supplies. LNG shipments can take weeks to reach the UK and are often subject to global competition, driving up prices. European countries, by law, must maintain their storage levels at 90% before winter, further intensifying the competition for available supplies. The reduced availability of Russian gas due to the Ukraine conflict has further strained the market, causing the initial spike in February 2022. Additionally, incidents like the sabotage of undersea gas pipelines and electricity cables seen recently have disrupted supplies across Europe, exacerbating the energy crisis. 

The UK is particularly dependent on imports from Norway, but regular maintenance issues often limit the country’s gas exports. For 4 days already in 2025, the UK consumed more gas to generate electricity day than any day over the last few years due to the cold spell. It is important to note that the winters of 2022 and 2023 were relatively mild, which has led to increased pressure on the system in 2025, as it will do in any future cold spells. 

Electricity Generation and Consumption 

The UK’s electricity infrastructure faces its own set of challenges. The National Grid is not easily capable of transmitting electricity from generation points to where it is needed, and the cost of upgrading this infrastructure will be significant, taking years to complete. These costs will ultimately need to be recovered from those who use energy. 

The UK is also reliant on electricity imports through interconnectors (undersea cables) from neighbouring countries. When the UK faces high demand due to low wind, other European countries often experience similar conditions, further limiting the ability to import electricity and placing additional strain on prices. 

Electricity consumption in the UK is on the rise and is set to increase further. In January 2025, the National Energy System Operator (NESO) issued an alert, urging market actions to increase electricity reserves between 4 pm and 7 pm due to concerns that demand would outstrip supply and cause blackouts. This is the first winter without the backup of coal-fired generation, adding to the system’s vulnerabilities. 

Government Energy Plans and Impact on Prices 

In July 2024, the UK government announced a target to reduce electricity generation from gas by 100% by 2030, although this has since been revised to a 95% reduction. This shift is expected to put increasing pressure on gas prices as infrastructure costs remain while demand for gas falls. These costs will likely be passed on to energy consumers. 

Given the inability to upgrade the transmission system before 2030 and the continued regular dependence on gas for up to 50% or 60% of electricity generation, it is difficult to see how the energy shortfall can be addressed quickly. The UK’s reliance on imports of electricity is subject to many external factors such as weather conditions, system failures, strikes, sabotage, and political instability in neighbouring countries, all of which increase the vulnerability of the UK’s energy market and drive-up prices of both gas and electricity. 

On January 9, 2025, The Telegraph reported that the Bank of England has warned that “Net Zero is driving up energy prices.” This reflects broader concerns that the transition to a net-zero economy is contributing to rising energy costs. 

Conclusion 

Compared to 2022, energy prices remain relatively low but are spiking frequently due to current demand and supply issues. Given the factors outlined, including a lack of alternatives to gas, the uncertainty surrounding energy imports, and the ongoing challenges in upgrading the transmission network, energy prices are expected to continue rising. The care sector, already under financial strain, will likely face further significant cost increases in the coming years and as such needs to act early to mitigate these issues where they can. 

Advice for the Care Sector 

Fixed-Price Energy Contracts: It is possible to secure competitive fixed-price energy contracts up to one year in advance of the contract start date. However, prices for contracts starting more than a year in advance may be less competitive due to market conditions. The care sector should consider looking at rates to make an informed decision about renewing to mitigate future price increases. This can be done through brokers; however, caution is advised over commissions some brokers will make which may influence the offers they present to energy consumers, which may not always be in their best interest. 

Care Sector Combined Energy Procurement Cost: Most brokers will access portals to secure contracts which will be shared with retail and other sectors and not benefit from the energy usage profile for care services, which is very different from the high street or industry, for example. Having direct access to many energy suppliers, Care England via its partner Focus Energy Services can obtain the lowest cost bespoke energy contracts available specifically for the care sector to reflect care providers’ individual requirements and consumption profiles and to take advantage of reduced night tariffs, for example, in some cases. These contracts over the last two years have evidenced the lowest possible contract rates over the platform-generated quotes most brokers use, as the energy supplier considers the care sector’s unique and different energy consumption pattern. The Care England Energy Tender is free to enter and has no obligation and can be accessed here. 

Solar Energy: Installing solar panels can offer long-term savings, but the decision should be made only after carefully evaluating the installation costs, potential savings, and energy needs. Many proposals seen in the market do not provide accurate or comprehensive cost-benefit analyses, so it is crucial to obtain reliable data before committing. Care England’s energy partner Focus Energy Services will review solar proposals for Care England members. No charge is levied for this service which reviews the calculations and small print.