Why are UK electricity bills so expensive?

An important reason that power is expensive in the UK is that it doesn&#x27;t use zonal pricing and is effectively not giving the right price signals to consumers of power to move closer to where the cheap power is (e.g. data centers) or to conserve power when power is expensive; or producers of power to invest in power generation closer to where the power is scarce and expensive.<p>Another point to make is that the national wholesale price of power in the UK is based on the price of the most expensive thing in the market at any point. Which now that they shut down coal is usually gas which at this point the UK mostly imports because gas production in the North Sea fields has been petering out. It no longer is the cheap resource it once was.<p>Even Scotland which either exports or curtails dirt cheap wind power most of the time gets to pay expensive gas rates for their power. Why is power curtailment a thing there? Because there is no price incentive to use the power. Otherwise people might be doing sane things like charging their EVs, powering their heat pumps, etc. Instead Scotland imports gas for heating and petrol for driving their cars. At the same time they curtail wind power by the GW.<p>Greg Jackson from Octopus (who are the largest energy operator in the UK) has been calling for this for some time. I don&#x27;t live there but his name comes up a lot in several of the clean energy podcasts I follow. Smart person that has a lot of sensible things to say on this topic.

&gt; The UK has achieved the fastest rate of grid decarbonisation among advanced economies. A lot of this progress occurred when renewables were still expensive, so we are stuck with a cost hangover. Luckily, renewables are getting much cheaper, so the tradeoffs in future policy are very different.<p>A silver lining at least. I’m old, so won’t see the benefits of this I’m sure, but it’s still nice to know we’ve made some tangible progress toward a cleaner future

The graph shows the price for 3100 kWh. I&#x27;m not sure if that is a very low annual amount or a very very high monthly amount.<p>The average US household uses 10,000 kWh annually ~833 kWh per month. So I&#x27;m guessing most Americans reading the article and looking at the interactive graph are thinking either: this is very cheap or very expensive, depending on whether they are assuming it&#x27;s monthly or annual.<p>In the US the average price for 3100 kWh in California would be $1062 which is among the highest in the continental US. So right in line with GB.<p>In New York it would be $710. Florida it would be $454.<p>So it&#x27;s high, but not as eye-watering as it seemed to me initially.

Important to remember the process of privitisation that occurred and the opportunities for profiteering that the new complexity allowed.<p>Yanis Varoufakis discusses it at length here: <a href="https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=R3bo-s_OY4Q" rel="nofollow">https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=R3bo-s_OY4Q</a><p>He characterises the energy market as a scam. I tend to agree.

So many uninformed people in the comments here.<p>&quot;The Carbon Price Support (CPS), introduced by the UK Government in April 2013, has led to a substantial reduction in electricity generated from coal, which fell by 93% from a monthly average of 13.1 TWh in 2013 to only 0.97 TWh in 2019 (Ofgem, 2019a).&quot;<p>They actually correctly priced the externalities and managed to decimate coal usage in the UK in a single decade. This increased prices accordingly.<p>This should be applauded, they correctly designed a scheme so that the economics aligned and coal was quickly removed. We can now focus on increasing energy production from other means and decreasing prices.<p><a href="https:&#x2F;&#x2F;www.ucl.ac.uk&#x2F;bartlett&#x2F;sustainable&#x2F;sites&#x2F;bartlett&#x2F;files&#x2F;annex_-_cps_-_final_-_20102019.pdf" rel="nofollow">https:&#x2F;&#x2F;www.ucl.ac.uk&#x2F;bartlett&#x2F;sustainable&#x2F;sites&#x2F;bartlett&#x2F;fi...</a>

29p &#x2F; kWh doesn&#x27;t hold a candle to PG&amp;E costs in the San Francisco Bay Area.<p>It&#x27;s ironic that it&#x27;s quite a bit cheaper to use natural gas here, since we&#x27;re supposed to convert to electricity to save the planet.

The rate shown is 29p which comes to 36 cents.<p>It is substantially less than PG&amp;E California prices, which average around 50-55 cents.

A couple of years ago I found Assassin&#x27;s Creed 2 for £2.50 - bargain! I&#x27;d never played it. At the end of the quarter my electricity bill was £600 higher than usual. Not a bargain!

Im old enough to remember when Prof. Ian Fells [1] discussed most of these problems in the early 1980s in the UK. Our “time from problem identification to solution deployed” is absolutely abysmal in the UK.<p>[1] <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Ian_Fells" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Ian_Fells</a>

Is 906 GBP (~1100 USD) typical for a household? That seems outrageously high.

Here&#x27;s a controversial take: electricity is incredibly cheap <i>for the utility it provides</i>.<p>It is also a fairly well working market <i>in the current system context</i>.<p>I witnessed this by working for an electricity related startup and by doing all the math involved it was really hard to make the math work out right. The possibility to optimize is there but the margins are really slim, even with the large price swings in the time of use markets in EU.<p>Can the infrastructure be better? Absolutely, it needs ton of work, but again margins are slim and incentives for large improvements are small.<p>Do we have a dire need for renewable and moreover dispatchable renewable energy? Absolutely. This means more clean generation and more storage (quite hard).<p>Does energy <i>feel</i> expensive for households? Yes.<p>Is it actually expensive?<p>Could you imagine life without it?<p>What would it be like?<p>If you were in this situation, how much would you be willing to pay then?

California regulators just approved its 6th rate hike of 2024.<p><a href="https:&#x2F;&#x2F;abc30.com&#x2F;post&#x2F;california-regulators-approve-pges-5th-rate-hike-2024&#x2F;15679054&#x2F;" rel="nofollow">https:&#x2F;&#x2F;abc30.com&#x2F;post&#x2F;california-regulators-approve-pges-5t...</a>

I find it so weird that UK citizens have often just sort of passively chosen to be poor. Like they still had food rationing for <i>years</i> after WW2. Is there some sort of cultural blind spot which prevents them from understanding that there are better ways to do things?

what&#x27;s not mentioned is the consequence of having expensive power.<p>the average UK consumer consumes 1&#x2F;3 of the power consumed by a US consumer.<p>which makes the average UK energy consumption is equivalent to one of a low-middle income country.<p>energy consumption is heavily tied to prosperity.

The UK should fire their government and hire one that can deliver cheap energy via policy that creates the potential for a cheap energy market. This isn’t hard.

The same author wrote the blog post that was on the front page here recently about the plummeting cost of solar [0]. I really like his posts, readable by someone like me who is way below <i>layman</i> on the subject, but I think also pretty interesting to someone with experience in the field.<p>[0] <a href="https:&#x2F;&#x2F;climate.benjames.io&#x2F;solar-off-grid&#x2F;" rel="nofollow">https:&#x2F;&#x2F;climate.benjames.io&#x2F;solar-off-grid&#x2F;</a>

Yeah the &quot;network costs&quot; bit should probably have a caveat about how they are a natural monopoly and are absolutely rinsing the UK for profits.<p><a href="https:&#x2F;&#x2F;www.theguardian.com&#x2F;business&#x2F;2022&#x2F;nov&#x2F;20&#x2F;unite-union-rampant-profiteering-ofgem-cap-power-distributors-profits-sharon-graham" rel="nofollow">https:&#x2F;&#x2F;www.theguardian.com&#x2F;business&#x2F;2022&#x2F;nov&#x2F;20&#x2F;unite-union...</a><p>&quot;Supplier costs and margins&quot; probably should take a fair bit of the blame too.<p>When Thatcher privatised the UK energy industry to make it &quot;competitive&quot;, they basically created an entire complex web of middlemen. The systems they use to communicate is enormously complicated, still kind of stuck in the 90s (think CSV over FTP), and would be basically unnecessary if it were just one company.<p>Ok in fairness electricity makes more sense to privatise than water or railways - at least you <i>can</i> choose where to buy your electricity from, within reason.

Some of these are &quot;costs&quot; which reduce costs elsewhere.<p>Smart meters for example, though rollout has hit snags and they&#x27;ve become targets for weird conspiracy theories, they are basically designed to give better real time info on electricity demand which helps with managing the grid.<p>This in theory should save money elsewhere.<p>Similarly for CfD. Yes the government may on net be paying a subsidy to get wind power built but what was the next best option? If that costs more than the CfD then that&#x27;s a win.

What happened in 2022!?<p>In 2021, it was 22p&#x2F;kWh and in 2022, it went to 44p&#x2F;kWh.<p>It&#x27;s come down 6-7p each year since but doubling in one year is crazy.

Nitpick: such recurring costs are not &quot;expensive&quot;; they are &quot;high&quot;. It&#x27;s like saying a plane is flying at a &quot;large&quot; altitude, or a car on the highway is traveling at a &quot;big&quot; speed.<p>Native english speaker, but definitely not a grammarian, so I can&#x27;t explain why...

&gt;Use local solar generation, and a lot of batteries. This works well in most of the world, but less so in northern Europe (it&#x27;s not very sunny).<p>WHERE???? Nobody gets their electricity this way at any reasonable scale.

Nodal vs Zonal pricing definition : <a href="https:&#x2F;&#x2F;diversegy.com&#x2F;nodal-pricing-vs-zonal-pricing&#x2F;" rel="nofollow">https:&#x2F;&#x2F;diversegy.com&#x2F;nodal-pricing-vs-zonal-pricing&#x2F;</a>

How much does digging a hole or laying a cable cost here in the UK compared to elsewhere? I&#x27;m just trying to get a feel for whether things like the transmission&#x2F;distribution network costs are higher than elsewhere.

To pay for renewable energy ? Thats what&#x27;s happening in my country , although renewable energy supporters claim renewables are cheaper. .....

The answer is because the UK moved away from their most abundant and cheapest energy source. It&#x27;s not rocket science.

Third option not discussed: have the military leverage its existing nuclear reactor competency to build a fleet of nationalized nuclear power generation stations. I&#x27;m not saying that they should tile the island with submarine-scale reactors, I&#x27;m saying that their supply chain for building those knows how to build nuclear power stations.<p>The only thing which makes this prospect expensive, is the lack of political will to make it not expensive. So find the political will.

I&#x27;ll mention it briefly here in case anyone missed the answer: short-term tax revenues.

They are getting reamed. Oops, we pay about the same in California.

...because houses are made of cardboard and use electricity for heating.

The Uk should just burn coal for a while. I’m sorry but it’s the only sane solution. The current energy prices are wiping out the economy.

Commercial energy broker here - the only 2 &#x27;real&#x27; costs in your price are the wholesale and supplier costs. Choose suppliers that offer a fully-fixed electricity contract, so that made up variable costs such as distribution, network, etc are all factored into the unit rate that the supplier charges you for your contract. Avoid smart meters at all costs. Renewable &#x2F; green contracts are always a lot more expensive than standard contracts. I help businesses across the UK get the lowest rates in the market, if it&#x27;s something you need help with reach out to me - yousaveutilities.co.uk