How the Government’s 2025 Spending Review can help make new energy work

Recent years have posed significant challenges to some households and businesses, with financially vulnerable families and individuals particularly hard hit by the cost-of-living crisis. If we are to protect these especially vulnerable people from ongoing issues and future shocks while ensuring lower electricity costs for everyone, it will be essential not only to introduce policies that recognise the country’s changing economic situation, but also help unlock the potential of exciting new green technologies. 

By introducing the following changes at the earliest opportunity, we can help to keep people’s bills down, but also build more support and momentum for the energy transition, ensuring the UK’s energy and financial security for the future. 

Three actions to help make new energy work 

Introducing targeted price protection 

We know that a significant number of households in the UK have needed help paying their bills since the beginning of the energy crisis, but effectively targeting financial support for them is a persistent challenge. In order to introduce targeted price protection that gives much needed relief to financially vulnerable people, we need better data to assess who is most in need. 

To that end, E.ON is working with Stonehaven to develop a data-led approach to highlight where support is most needed using data sets predominantly from government agencies and departments. The Government can help us translate this into more targeted price protection by ensuring the best quality data is available, including assessments of household income. To fund it, we would want to continue using money from energy bill payers as is currently the model for the Warm Homes Discount, but supplement these funds with help from the Government where needed and possible. 

Electricity Levy Rebalancing 

For the energy transition to work, it is essential that we continue to push more investment in green technologies such as heat pumps and electric vehicles, while moving away from fossil fuels more broadly. However, with electricity costs in the UK already among the highest in the world and relatively poor market flexibility, there are currently only limited incentives to do so. We’ve already installed heat pumps in thousands of properties around the country, but the perceived costs of moving away from gas boilers are still deterring many consumers from making the switch, even with the offer of a grant for installation. 

To solve the problem, we recommend the Government begins the process of transferring policy costs away from electricity and onto gas. This will serve to further align official policy with stated goals, and drive momentum for the energy transition. 

EVs VAT

Like the Government, we want people to switch to electric cars as quickly as possible, but existing policy makes this more difficult for some than others. For the many households without a private driveway, for instance, charging an EV at home is not option, and using a public charge point incurs 5% VAT. In a lot of cases, this can make charging an EV more expensive than filling up with petrol or diesel. 

To make electric vehicles a viable option for everyone, we suggest the Government removes VAT for public chargers, and makes use of the £950 million ring-fenced to deliver a national EV charging network as soon as possible. 

Small changes, big differences 

As we progress further into 2025, there is cause to be optimistic. The technologies now available to us such as solar panels, EVs, and domestic batteries are opening all new avenues for innovation. 

For instance, we are currently preparing a pilot for the UK’s first Energy Sharing Community, equipping public buildings with solar PV to help them generate electricity and sell surplus to local homes. We also have a project already underway in Coventry putting batteries in financially vulnerable households at no upfront cost, which over the long-term we believe will offer better and more economically efficient support than existing measures. 

These and many of the other solutions we’re working on rarely require great technological breakthroughs or massive new infrastructure, but rather a change of policy that helps unlock the potential of progress that has already been made. That’s why we’re asking the government to consider these changes at the next spending review – because, through actions great or small, it’s on us to make new energy work. 

Go here to find out more about Energy Sharing Communities, and here to learn about our battery pilot in Coventry.