UK gas prices reached a two-year high in early February 2025, according to analysis published by the Energy and Climate Intelligence Unit (ECIU), an independent think tank1. The ECIU said prices have since fallen from those levels but remain volatile1.
The finding was published alongside the ECIU's analysis of the energy price cap for the second quarter of 2025, which Ofgem announced on 25 February1. The ECIU calculated that wholesale costs driven up by gas prices will have added £3,000 to household bills by this autumn, four years into the gas crisis, equivalent to an average of £750 a year per household1. Of that £3,000, the majority, £1,800, comes from higher gas bills1.
The ECIU said support for renewables via bills has on average been the same during the energy crisis as in the years before, at just over £100 per year in both periods, and that the cost of newer fixed-price wind farms under Contracts for Difference agreements subsidises bills when wholesale prices are high1. It said wholesale costs on gas and electricity bills together cost around £400 per year before the gas crisis and are set to cost almost £1,200 per year on average during it1. The ECIU said the effect on electricity bills is smaller because renewables are helping to reduce the UK's reliance on gas power plants1.
"Let's be very clear on this, it is gas that has been driving up energy bills over the past four years and it continues to do just that. Families are struggling because the UK is heavily reliant on gas for both electricity generation and home heating, and the price of gas is volatile."
The ECIU also cited the Energy Crisis Commission, made up of representatives from the energy industry, business and consumer groups, which last year found the UK remains "dangerously underprepared" for another gas crisis because of its reliance on gas for 30 to 40 per cent of power generation and 85 per cent of home heating1. The Commission recommended continuing to build out renewables, fitting more insulation and heat pumps to reduce gas demand, and reforming the energy market so that gas no longer sets the price for all electricity1.
Why it matters for households
The ECIU's figures indicate that the wholesale cost of gas, rather than schemes supporting renewables, has been the dominant upward pressure on household bills over the four years to autumn 20251. For a home's energy independence, the analysis points to two dependencies: gas for electricity generation and gas for heating1. The ECIU said renewables are reducing the UK's reliance on gas power plants, and that replacing gas boilers with heat pumps would shield households from price swings1. The Energy Crisis Commission's finding that the UK relies on gas for 85 per cent of home heating sets out the scale of that exposure1.
The ECIU said the price cap could fall later this year but is currently set to rise again after that, underlining that volatility is set to continue1. Cornwall Insight estimates issued in February 2025 were used for the third quarter of 20251.
What happens next
The ECIU said the price cap could fall later this year but is currently to rise again after that1. No further dated steps are set out in the material.