Why is electricity in the UK so expensive?
Let’s be honest, nobody’s ever shown off their energy bill with pride. If you’ve opened yours lately and wondered if your meter’s moonlighting as a slot machine, you’re not alone. So, why is electricity in the UK so pricey? Here’s the no-nonsense, Vimma take.
Gas sets the price (even for electricity)
It all starts with how the wholesale price is set. In the UK, the cost of electricity is determined by the most expensive generator needed to meet demand and most of the time that’s gas-fired power plants. Even with more renewables on the grid, gas still calls the shots for what everyone pays.
We import a lot of our gas
We don’t produce enough of our own gas to keep the lights on, so we have to buy it in from abroad. That means when international prices spike, whether it’s due to global events, supply issues, or everyone wanting energy at once, our bills shoot up too.
Volatility and limited storage
Though international gas prices have dropped a bit recently, they’re still high overall and the market is volatile. The UK doesn’t have much gas storage, so we’re exposed to these swings. Suppliers often buy gas in advance to avoid nasty surprises, but that means high prices get “locked in” for a while.
Standing charges, grid upgrades, and green levies
Your bill isn’t just about what you use, there’s a standing charge just for being connected, which covers things like maintaining the wires, supporting vulnerable households, and picking up the pieces when suppliers go bust. Add in the cost of upgrading our ageing grid and funding renewable projects, and it all adds up.
The weather (yes, really)
When it’s cold, we all crank up the heating; when it’s calm, wind turbines don’t spin as much. Both can push prices up, especially during a cold snap.
What can we do about it?
There’s no magic fix, but there are a few things that could help in the long run:
- Produce more of our own gas – but unless it’s state controlled, private producers will likely sell to the highest bidder abroad.
- Build more renewables – onshore wind and solar are the cheapest form of generation and don’t rely on volatile fuel prices.
- Reform how the market prices electricity – so the price isn't set by the highest cost generation source.
In the meantime, what can you do? Use less where you can, shift what you can to off-peak times, and let Vimma store cheap electricity for you. Less spent on bills, more left for the fun stuff.