Ember, an independent energy think tank, published analysis on 19 July 2022 finding that the price of fossil gas was responsible for 80 per cent of the increase in UK wholesale electricity prices over the period July 2021 to June 20221. Monthly average wholesale electricity prices rose by almost £120/MWh, from £55/MWh in the previous 12 month period to £171/MWh, and Ember attributes £93/MWh of that spike to the cost of fossil gas1.
The analysis states that wholesale power prices more than tripled compared with the previous 12 month period, and that the cost of generating electricity from gas plants did the same1. Ember reports that the UK generated 40 per cent of its electricity from gas plants in 2021, and that between December 2020 and December 2021 the cost of generating electricity from a combined cycle gas power plant rose from £48/MWh to £227/MWh1.
Ember's publication also addresses competing explanations for rising bills. It states that rising energy costs have almost nothing to do with green subsidies or the price of carbon allowances, despite claims by a small group of Conservative MPs in the Net Zero Scrutiny Group, and that the reason is soaring fossil gas prices1.
"New analysis by energy think tank Ember reveals that the skyrocketing price of fossil gas is responsible for 80% of the increase in UK wholesale electricity prices over the period July 2021 to June 2022."
The analysis notes that the UK held a record breaking renewables auction on 7 July, which secured 11 GW of clean energy at the lowest wind and solar prices seen so far1. Ember describes itself as an independent energy think tank that aims to accelerate the clean energy transition with data and policy1.
Why it matters for households
Wholesale prices are the raw cost of electricity before network charges, levies and supplier margins are added, so a rise of this size in the wholesale component feeds through into household bills. Ember's figures put the bulk of that rise on gas rather than on renewables support or carbon allowances, which matters for how the causes of bill increases are described. The analysis also points to the UK's continued reliance on gas fired generation, at 40 per cent of electricity in 2021, as the channel through which volatile global gas prices reach domestic bills1. For a household, that link is the difference between exposure to imported fuel prices and reliance on generation sited within the UK. How wholesale prices translate into the energy price cap and how the wholesale gas and electricity markets set that cost are set out in the site's guides.
What happens next
Ember states that the energy price cap will increase again in October 2022, without giving a figure1. The analysis was published before the Conservative leadership contest concluded; it refers to the incoming prime minister and does not name one1. No further dated steps are given in the source.