At the peak of the energy crisis in January 2023, soaring gas costs resulted in UK consumers paying four times more for their electricity than two years before under Ofgem's price cap, according to analysis published by the energy think tank Ember1. The finding appears in a report, published on 18 October 2023, comparing two modelled futures for the UK power system1.
The report states that in 2021 the UK committed to generating all electricity from clean sources by 2035, targeting 95% clean power in 2030 under the British energy security strategy1. It says the UK is capable of producing 98% of its electricity from clean sources by 2030 if existing commitments are delivered on time, while a lower ambition "Falling short" scenario would put the UK at 89% in 20301.
On bills, Ember models that the annual electricity bill for an average household would decrease by £300 in 2030 compared with today under a pathway of ambitious delivery of renewable commitments, saving UK households £8.7 billion in 20301. The low ambition pathway would leave consumers missing out on more than £1 billion in electricity bill savings, costing each household an additional £40 per year by 20301.
The report breaks the wholesale component of household electricity bills down as follows1:
| Scenario | Wholesale component |
|---|---|
| Ofgem Q3 2023 price cap | £176 per MWh |
| "Falling short" | £89 per MWh |
| "Delivering commitments" | £65 per MWh |
Ember describes the £65 per MWh figure as "a staggering two thirds lower than the £176 per MWh in OFGEM's Q3 2023 price cap"1. It adds that wholesale costs fall by £112 per MWh while network costs increase by only £26 per MWh1.
"The longer the UK relies on fossil fuels, the longer households will feel the pinch. A clean power system will save households hundreds of pounds a year off bills, but lagging government action risks blocking those benefits."
The report also states that the "Delivering commitments" pathway sees reliance on imported fossil gas reduced by half, equivalent to 4 bcm lower imports, and that the UK could export 49 TWh of electricity annually in 2030, against importing around 4 TWh a year in the "Falling short" scenario1. It notes that a renewable auction round failed to secure any offshore wind capacity, describing this as "a critical technology for the UK's clean power ambition"1.
Why it matters for households
The fourfold increase in electricity costs under the price cap between 2021 and January 2023 is the backdrop against which household energy independence is now discussed. The report links the level of household bills to the share of gas in electricity generation, and to how much electricity the UK imports rather than produces1. Its modelling suggests that a system built around domestic renewables reduces exposure to imported gas prices, while a slower build-out leaves greater reliance on gas imports and on power from neighbouring countries1. The bill figures it gives are modelled outcomes for 2030, not current prices, and depend on delivery of commitments that the report says are behind schedule1.
What happens next
The report states that three future renewable auction rounds must each secure 8 GW of offshore wind if the UK is to reach its 2030 target, against an average of 4 GW across the first four auctions1. It also notes that securing all permits currently takes five to six years for a wind farm and two years for a solar farm, and that the Norway-UK interconnector is already delayed by three years1. No further announcement dates are given in the report1.
Sources1 cited
- Cutting the bills꞉ UK households profit from clean power | Ember, ember-energy.org