Revealed: Expensive gas behind ‘nearly 90%’ of rise in UK electricity bills

Nearly 90% means that wholesale energy costs accounted for about £161 of the £180 real-terms increase in a typical household electricity bill between 2020 and the fourth quarter of 2026. Those wholesale costs rose mainly because gas became much more expensive.

The figure does not mean every household bought 90% more gas. It means the cost of energy purchased for the electricity system was responsible for most of the bill increase. Gas often sets the market price for electricity, including power sold alongside cheaper renewable generation.

Other costs also rose. Network charges added £72, while supplier operating costs increased by £46. By contrast, renewable contracts for difference reduced bills by £17 under the current price cap. The figures therefore point to expensive gas, rather than net-zero policy, as the dominant pressure on electricity bills.

After adjusting for inflation, a typical UK household electricity bill was £180 higher in the fourth quarter of 2026 than during the same period in 2020. That measures a genuine increase in purchasing cost, rather than simply reflecting higher prices across the economy.

Wholesale costs accounted for £161 of the rise, or about 90%. The analysis links this increase mainly to expensive gas. Since the electricity system still uses gas as its marginal source at many times, higher gas prices can raise the market price paid for electricity more broadly.

The remaining increase came from other parts of the bill. Network costs added £72, while supplier operating costs added £46, partly linked to household energy debt. Some policy costs fell, however, because support was shifted to taxation and other charges were removed or reduced.

High gas prices affect renewable-generated electricity because electricity is traded through a shared market, not priced separately according to each plant’s fuel. When gas plants are needed to supply the final portion of demand, their higher costs can influence the market price received across the system.

This is the marginal-unit mechanism. Gas has often been the flexible source available to balance supply and demand, while wind output varies. If the system needs gas to fill a shortfall, expensive gas can set the price even when wind and other renewables are producing much of the electricity. The article says the UK system still relies too much on gas in this role.

More clean generation can weaken this connection. The article reports that electricity bills have risen less rapidly than gas bills since the Hormuz crisis, as increased renewable generation helped electricity prices decouple from gas prices. Renewable contracts for difference also reduce current bills.

The marginal unit is the generating source needed to provide the next unit of electricity required by the system. It matters because its operating cost can determine the wholesale price paid for electricity at that time. The marginal unit is not necessarily the largest source of power.

In Britain, gas plants have often performed this role because they can respond when demand changes or renewable output falls. Wind and other renewables may be producing electricity at lower costs, but gas can still be needed to balance the system. When gas prices rise, the price-setting cost rises too.

The article says Britain’s electricity system still relies too much on gas as its marginal unit. Increasing renewable generation is beginning to weaken that link. Since the Hormuz crisis, electricity bills have risen less rapidly than gas bills, suggesting cleaner generation is providing some protection from gas-price shocks.

The 2022 global energy crisis caused a major rise in UK energy costs after Russia’s invasion of Ukraine disrupted energy markets. In January 2026, Carbon Brief reported that high gas prices accounted for two-thirds of the increase in electricity bills since before that crisis.

Gas prices remained vulnerable after 2022. Amid ongoing conflict in the Middle East, UK wholesale gas prices reached 220p per therm, or £75 per megawatt hour, on 19 October. That exceeded the 2022 average of 210p per therm, equivalent to £72 per megawatt hour.

The later conflict therefore renewed pressure instead of ending the earlier shock. The article describes the current episode as another gas crisis. It also reports that electricity bills have risen less quickly than gas bills since the Hormuz crisis, because stronger renewable generation has started to break their close connection.

Renewable power can reduce the link between gas and electricity prices by supplying more of the system’s demand without buying fuel whose price has soared. When clean generation is available, gas plants are needed less often to provide the marginal electricity or balance the system.

Contracts for difference, or CfDs, provide support for renewable projects through an agreed pricing arrangement. In the analysis, renewable CfDs reduced electricity bills by £17 under the current price cap. The article also reports that increased clean generation helped electricity bills rise less rapidly than gas bills after the Hormuz crisis.

This protection is not complete. The UK still relies heavily on gas, and more grid investment is needed to move electricity and balance supply. However, expanding renewable generation and using CfDs can gradually reduce exposure to international gas-price shocks and make electricity costs less dependent on gas.

The UK is unusually exposed because over 80% of households are connected to gas mains. Their heating costs can rise directly when international gas prices increase. Electricity is also vulnerable because the system still relies too much on gas as its marginal unit, allowing gas costs to influence wholesale power prices.

The article shows the impact clearly. Wholesale gas costs caused 77% of the real-terms increase in household gas bills since 2020. They also caused nearly 90% of the rise in electricity bills. This exposure makes international events, including the Ukraine crisis and Middle East conflict, important to household finances.

Over time, greater renewable generation can reduce gas use and weaken the price connection. Contracts for difference already reduce electricity costs, while grid investment can move clean power and improve balancing. The transition is not cost-free, but the analysis says its costs are dwarfed by rising gas prices.