Why UK electricity is so expensive

How much more does the UK pay?

Why does the gas price set the electricity price?

Britain generates a large share of its power from gas and heats most homes with it. In a wholesale market the last power station needed to meet demand sets the price for everyone, and in Britain that is usually a gas plant. So when gas prices spike, electricity follows even though much of it comes from wind and nuclear. The UK now relies on imported LNG and Norwegian pipeline gas rather than cheap Russian pipeline supply, which pushed its gas costs up alongside the rest of Europe.

How much do carbon costs add?

Gas power stations pay for their emissions under the UK Emissions Trading Scheme, plus a UK-only top-up, the Carbon Price Support, of £18 a tonne. Because gas usually sets the price, that carbon cost lands on every unit sold, not just on the gas-fired ones.

Why are policy costs on electricity rather than gas?

Renewables subsidies and other schemes have mostly been loaded onto electricity bills rather than gas bills, for historical reasons rather than by design. Businesses pay more of these than households, which is a large part of why UK industrial prices stand out even more than household ones.

What do network and balancing costs add?

The grid was built around big power stations near cities. Wind is mostly in Scotland and offshore, so the grid needs major new lines, and until they are built the system operator pays wind farms to switch off and gas plants elsewhere to switch on. Both costs go on bills.

What do cheaper countries have that the UK does not?

The countries with the cheapest power in the developed world have either large hydro and nuclear fleets (Norway, Sweden, Canada, France) or abundant home-produced gas (the United States). The UK has neither in the same quantity: North Sea gas is declining and much of the nuclear fleet is closing before new plants arrive.