UK households are paying 80% more for electricity since 2020, thanks mainly to fossil gas. Wholesale prices tripled in just one year. Gas-powered stations, which generate 37% of UK electricity, set pricing for all sources—even cheaper renewables. Cold winters, COVID recovery, and pathetically small gas reserves created a perfect storm. Russia’s limited supply didn’t help either. The market’s not fixing itself anytime soon; the future looks expensive unless something changes.
Millions of UK households are feeling the squeeze as electricity bills have skyrocketed by a staggering 80% since 2020. The numbers tell a brutal story. Wholesale electricity prices tripled in just one year, jumping from £36/MWh to £107/MWh between August 2020 and 2021. And guess what? It wasn’t your solar panels causing the problem.
Fossil gas is the real villain here. It’s responsible for 80% of the price hike that’s emptying British wallets. Gas costs for electricity generation shot up by £61/MWh, accounting for 86% of the wholesale price rise. With the UK relying on gas for 37% of electricity production, consumers are basically hostages to global gas markets. Fun times.
The perfect storm hit hard. A cold winter depleted storage. COVID restrictions lifted, driving up demand. Asian buyers outbid Europeans for LNG shipments. And Russia? Well, they weren’t exactly rushing to help with extra supply through Ukraine. The UK, with its pitiful gas reserves, was left particularly vulnerable.
Here’s the kicker – generating electricity from existing gas plants now costs three times more than new onshore wind. Monthly average UK wholesale prices rose by nearly £120/MWh from 2021-2022. It’s almost twice as expensive as solar too. Renewables don’t face the roller coaster of fuel costs that gas does. They’re just… cheaper. Who would’ve thought?
The UK’s energy market structure doesn’t help either. The marginal pricing model means gas-powered stations set the price for all electricity. One expensive source, everyone pays. Brilliant system, really.
The government eventually stepped in with the Energy Price Guarantee and the £400 Energy Bills Support Scheme. Too little, too late for many. The April 2025 price cap will still be 6.4% higher, hitting £1,849 for typical households. The aftermath has been devastating, with 28 suppliers going bust since 2021, further increasing costs for consumers.
Looking ahead, don’t expect miracles. The market remains volatile. Pre-crisis prices? Dream on. The real solution involves reducing reliance on international gas markets and ramping up domestic electricity supply. This aligns with global efforts to combat the 40% of emissions that come from electricity generation worldwide. Until then, keep those extra jumpers handy.
