As it became clear that the energy crisis caused by the conflict in Ukraine had cost the equivalent of £1,000 for every adult, the UK’s excessive reliance on gas was blamed for driving up prices.
According to a study by the Energy and Climate Intelligence Unit (ECIU), since Russia’s invasion of Ukraine nearly a year ago, high wholesale gas prices have cost UK energy suppliers an additional £50 billion to £60 billion, on top of the £10 billion to £20 billion they typically spend in a typical year.
Wholesale gas prices, which were already above average historically, reached record highs as a result of the invasion.
Household energy costs are far higher than the £1,000 extra highlighted by ECIU – which does not account for normal wholesale costs, suppliers’ margins and other charges wrapped into bills.
The International Monetary Fund said last year that British households have been the worst hit in western Europe because of the high dependence on gas. The UK uses gas for generating about 40% of its electricity and for heating 85% of its homes, which are also among the least energy-efficient in Europe.
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The study estimated that, had the UK made better progress towards net zero by improving housing efficiency, producing more wind power and deploying heat pump technology a typical household could have saved up to £1,750 in 2022.
Dr Simon Cran-McGreehin, the head of analysis at ECIU, said: “As the IMF has pointed out, the energy crisis hit UK households harder than those in other western European countries because, as a nation, we’re incredibly dependent on gas. The price of gas is largely set by international markets, so the only way to protect yourself is to use less.
“The onshore wind ban has been one of the barriers to this. We’re also running behind places like Sweden, Poland and Estonia on installing electric heat pumps.”
The study estimated that, if a similar crisis happened in 2030 when the UK has more cheap renewables, the annual savings could be about £34bn.
Last week research estimated that rising energy prices triggered by the Russia-Ukraine conflict could push up to 141 million more people around the globe into extreme poverty.
Wholesale gas prices reached a record 570p a therm last summer amid fears that Europe would be left with shortages this winter, and were as high as 381p a therm in mid-December.
The price has dropped sharply since to about 125p a therm because of mild winter conditions and stronger-than-expected gas storage levels in Europe. However, these falls are unlikely to feed through quickly into household bills as energy firms buy their supplies in advance.
Story adapted from The Guardian
