03 Aug UKERC Briefing Paper analysis the drivers behind high electricity bills
(Oilandgaspress) 03/08/26, – With the UK facing its second energy crisis in five years, debate around how to reform domestic electricity prices is back in full force. The high cost of power, exacerbated by international conflict, adds to the cost-of-living crisis and makes the planned electrification of heating and transport more challenging.
This UKERC Briefing Paper provides an analysis of the drivers behind high electricity bills, the expected trajectory of bill components through 2030, and the policy and market reforms that could meaningfully reduce costs for UK households. Over the last decade, average annual domestic electricity bills have grown in real terms from £643 to £968, driven by wholesale, network, operating and policy costs. Gas-linked wholesale prices have been the most volatile component, spiking by 381% between 2021 and 2023 following Russia’s invasion of Ukraine.
High gas dependence, low gas storage and the strong link between gas and electricity prices make both gas and electricity bills in the UK particularly vulnerable to fossil fuel price volatility. Individual fossil fuel energy crises each have the potential to be more expensive for the UK than the transition to net zero by 2050. New approaches to reducing energy bills are needed which are cost-effective, compatible with clean power goals and address the acute pressures from energy crises.
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