Why Your Energy Bills Have Skyrocketed — And How to Cut Them
European households have seen their heating bills increase by 60 to 120% between 2021 and 2024. Gas, heating oil and electricity all hit historic highs, and even though prices have eased somewhat, they remain well above pre-crisis levels. Here’s what happened, what’s likely to come, and — most importantly — what you can do right now to reduce your energy bill.
How much have energy prices actually risen?
Between January 2021 and the peak in winter 2022–2023, energy prices surged dramatically:
- Natural gas: the European benchmark (TTF) went from €20/MWh to over €300/MWh at its August 2022 peak — a 1,400% increase. It has since fallen back to around €35–50/MWh, still 2 to 3 times the pre-crisis level.
- Heating oil: from £0.50/litre in 2020 to over £1.20/litre in 2022. Current price: approximately £0.75–0.90/litre.
- Electricity: linked to gas through Europe’s marginal pricing mechanism, it followed the same trajectory. Average UK household energy bills exceeded £2,500/year at the peak.
In practice: a household paying £1,000/year for gas heating in 2020 is now paying £1,500 to £2,000.
What caused the energy price crisis?
- Dependence on Russian gas: before 2022, Europe imported 40% of its gas from Russia. The Ukraine invasion and subsequent sanctions abruptly cut those volumes.
- OPEC+ production cuts: successive oil price increases dragged heating oil with them.
- Cold winter 2021 + low storage levels: European gas reserves were already low before the Ukraine crisis hit.
- Slow energy transition: renewables could not yet compensate for a sudden supply cut.
Will energy prices fall back to 2021 levels?
The short answer: partially, but not to pre-2021 levels.
Europe has massively invested in LNG terminals and renewables, reducing dependence on Russian gas. But the structural cost of energy will remain higher than before the crisis for at least 5 to 10 years. Most analysts expect TTF gas prices to stabilise at €35–60/MWh through 2028.
The practical takeaway: adapt your behaviour to a structurally higher price level rather than waiting for a return to 2019 prices.
Smart thermostat: how much can you actually save?
A well-used smart thermostat saves 15 to 31% on your heating bill, depending on your current setup.
For a household paying £2,000/year in heating costs:
- Programmed schedule (time-based only): −15% = £300/year saved
- Smart thermostat with geofencing (Tado): −25% = £500/year saved
- Self-learning thermostat: −20 to 30%
A top-end smart thermostat (£130–£200) pays for itself in 4 to 6 months at current energy prices.
Our recommended smart thermostats
These models will help you cut your energy bill the fastest:
These thermostats pay for themselves in under 6 months at current energy prices:
Other ways to cut your energy bill
- Lower your boiler flow temperature to 60–65°C (not 80°C) → −10%
- Drop 1°C on your comfort temperature → −7% on your bill
- Bleed your radiators before winter → 5 to 10% efficiency gain
- Draught-proof doors and windows (strips, letter boxes, keyholes) → −10 to 15%
- Annual boiler service → +10% efficiency
Combined with a smart thermostat, these actions can reduce your bill by 35 to 45%.
FAQ
Will my energy bill go up again in 2026?
Analysts expect relative price stability in 2026, but geopolitical risks (Middle East tensions, weather) can create spikes. Investing in energy savings remains the best insurance against these fluctuations.
Does a smart thermostat work with my gas boiler?
Yes, the vast majority of smart thermostats (Tado, Netatmo, Honeywell) are compatible with standard gas boilers. Check for OpenTherm compatibility if you want boiler flow temperature control.
Are there grants available for smart thermostats?
In the UK, the Boiler Upgrade Scheme and some energy supplier offers can contribute to smart thermostat installation. Check the Energy Saving Trust website for current offers.
How quickly will a smart thermostat pay for itself?
At current energy prices, a smart thermostat that saves 25% on a £2,000/year heating bill saves £500/year. A £150 thermostat pays for itself in under 4 months.