2026: Turning progress into fairer energy for all

2025 was a year of contrasts for the UK energy sector. For many households, high bills remained a heavy burden, forcing difficult choices about heating and spending. Yet alongside these challenges, we saw progress and proof that innovation and collaboration can deliver change.

In Coventry, our strategic energy partnership demonstrated that by combining insulation, battery storage and smart tariffs, households can cut their bills by an average of more than £255 a year. In Yorkshire, our partnership with Northern Powergrid showed how free batteries can ease grid pressure and lower costs for local families. And in Newham, the energy generated by solar panels on the roof of a local school is helping to reduce bills for customers in the community, turning clean energy into a lesson for the next generation.

These projects matter because they show the future isn’t abstract. It’s here, and it works. But to make this future available to everyone, we need to tackle the issues that still hold us back.

Government steps are welcome and clarity is critical

November’s Budget brought some positive news on energy. The promise of a £150 reduction in bills through the removal of green levies is a welcome step in the right direction, and E.ON Next will pass on every penny to its customers. Extra funding for the Warm Homes Plan is also encouraging, but urgent clarity is needed on when the plan will launch and how the end of the ECO scheme will be managed. Without answers, supply chains stall and households wait longer for help.

While efficiency measures create the opportunity to save energy and money, flexibility takes this much further. It’s what gives customers real control over their usage and their bills – from when and how they use energy, to generating, storing and even trading it.  Together, the combination of energy efficiency, electrification and flexibility remain the most effective way to bring bills down sustainably, delivering savings today and building resilience for the future while reducing reliance on fossil fuels and avoiding the need for costly infrastructure expansion.

The rising costs we must tackle

One issue that has and will continue to hit every bill is the growth in non-commodity costs. These include new levies to fund £28billion of grid investment, rising costs through Contracts for Difference, system balancing and new nuclear construction under the Regulated Asset Base model. These investments are essential for a clean and more resilient energy system, but if they continue to be recovered through bills in the same way, households will feel the strain. People need to trust that what they pay reflects what they use, which is why in 2026 we’ll keep pushing for reform that delivers fairness and real relief.

Instead of shifting costs from one part of the bill to another, we need a comprehensive review of how system charges are allocated and a radical rethink of how they’re recovered. One option is to allow households and businesses to defer some of the costs of the energy transition through a new financing mechanism. This approach would avoid undermining existing generation contracts and align repayments with the point when customers start to see the benefits of the transition. By setting repayments at an affordable level and spreading them over several decades, we can ease immediate pressure while still funding the infrastructure Britain needs.

Targeted support can help bridge the gap

While investment in energy infrastructure is needed, and until the benefits of flexibility are really felt, we must go further to support the people who can’t wait and are most in need of help. Last year, four million people couldn’t afford essential bills, and energy remains one of the toughest costs to manage. That’s why we believe in targeted price protection that helps people now.

A social tariff based on household income and energy use would provide meaningful support to those hardest hit by rising costs. Our modelling shows that a scheme similar to the Netherlands could help 5.6 million UK households. It’s a smarter, fairer way to deliver support, and it would create a stable foundation for energy affordability so the transition to cleaner, cheaper energy leaves nobody behind.

A vision for 2026

The year ahead demands focus on making energy fairer, smarter and more affordable. That means scaling up products and services that give households real flexibility and control, with heat pumps, batteries, solar and smart tariffs working together to cut costs and accelerate the shift to low-carbon homes. It means practical schemes that strengthen resilience and create local jobs, because the energy transition should benefit communities as well as customers.

But technology and innovation alone won’t deliver fairness. Policy matters. We need measures that will reduce electricity costs for homes and businesses, remove regulatory burdens that slow innovation and layer additional costs, and shape a Warm Homes Plan that helps everyone benefit from the energy transition. That means enabling households to take advantage of solar panels and home batteries so they can generate their own power, store cheaper energy and use flexibility to cut bills.

We also need structural reforms that tackle the root causes of high prices. Moving gas generation assets into a strategic reserve would help break the link between electricity prices and the cost of gas, reducing market volatility and protecting consumers. At the same time, shifting more of the legacy non-commodity costs off electricity bills would ease pressure on households and make electrification more affordable.

These aren’t abstract goals; they’re the building blocks of a system designed to work for people. The UK has the skills, creativity and ambition to lead the world in building an energy system that works for everyone. When households have real power over how they use, save and share energy, the whole country becomes stronger. Energy supports everything we rely on, from our homes and businesses to the wider economy. When we get it right, it becomes the foundation for growth, resilience and opportunity. 2026 can be the year we turn progress into fairness, and E.ON is ready to play its part.

This opinion piece was first published in Utility Week.