Higher energy bills are here to stay, the head of one of Europe’s biggest oil and gas companies warned on Monday.
Anders Opedal, chief executive of Norwegian energy giant Equinor, said that while prices were likely to be less volatile in the future the need to invest in renewable energy sources meant bills will probably remain higher than they were before Vladimir Putin’s invasion of Ukraine.
“I think we see actually a kind of rewiring the whole energy system in Europe in particular, you know, after the gas from Russia was taken away,” Mr Opedal told the BBC ahead of the start of the Davos World Economic Forum.
“We need massively more renewables and the kind of climate ambitions in UK to be fulfilled. We need to do the industry in a totally different way, maybe using more hydrogen and so on.
“This will require a lot of investments. And these investments needs to be paid [for]. So I would assume that the energy bills may be slightly be higher than in the past but not as volatile and high as we have today.”
Energy bills have soared after Russia restricted gas supplies to Europe following western sanctions against the Kremlin over its invasion of Ukraine, which started last February.
Before then the typical UK household was paying around £1,300 a year but the average annual bill for homes is currently capped by the Government at around £2,500.
Gas prices have fallen thanks to so far mild weather across Europe reducing demand and higher storage levels, giving hope to hard pressed households facing a major squeeze on incomes amid high inflation.
Analysts at Investec last week cut their forecast for the Ofgem energy price cap - currently over £4200 - in the second half of this year to £2,478 for an average bill in July, down from its previous estimate of £2,640 earlier this month, and average £2,500 per year in the second half of 2023.
The Government’s energy support package for households has set a cap of £2500 until April but that is due to rise to £3000 after that.
But Mr Opedal added: “We need to treat energy as something that is not abundant. You know, because it actually has a value. I think we have had a lot of cheaper energy in the past and we’ve probably wasted some of it. So to make sure that you know, we are making the right investments now everyone’s to use as little energy as possible.”
Economists have predicted inflation could fall further when official figures for December are published on Wednesday.
Inflation fell to 10.7 per cent in November from its 41 year high of just over 11 per cent a month earlier.
Prime Minister Rishi Sunak has made halving inflation this year one of his five key pledges along with growing the economy and reducing national debt.