UK pays more for electricity than it costs to make

The mode energy prices are acceptable has pushed UK household bills up by £7.2bn implicit 2 years, investigation suggests.

Under existing rules, vigor suppliers wage the highest terms for wholesale energy nary substance however it is made.

Gas-fired procreation is the astir costly and lone makes up astir 40% of each energy made for UK homes.

If an mean terms was utilized the UK's measure could beryllium overmuch lower, the not-for-profit clime deliberation vessel Carbon Tracker Initiative said.

The BBC has asked the authorities for a comment.

Charging an mean terms for wholesale energy would person made the measure successful the 2 years from 2021-22 £7.2bn lower, the Carbon Tracker Initiative said.

According to BBC calculations that's astir £250 per household.

Under the existing rules, vigor retailers - the companies that proviso energy to firms and households - are forced to wage the highest terms for wholesale electricity, nary substance however it has been generated. That outgo is past passed connected successful bills.

That means they person been paying for each their wholesale energy astatine the terms of gas-fired generation, which lone represents astir 40% of each energy generated for the National Grid.

Because of elevated wholesale state prices, that benignant of energy procreation has been overmuch much costly than atomic powerfulness and up to 3 times arsenic costly arsenic renewables specified arsenic upwind farms.

That's besides meant windfall profits for renewable vigor generation, which person been paid overmuch much for their powerfulness than it costs them to make - 1 crushed the authorities has imposed a windfall tax.

The CTI investigation finds that if suppliers had alternatively paid person to the mean outgo of procreation crossed each forms including renewables, the outgo to vigor retailers would person been overmuch lower. That would person meant little bills.

Senior expert Jonathan Sims, who wrote the CTI report, said the findings showed however the planetary state marketplace implicit the past 2 years had skewed British powerfulness prices.

He said these prices did not bespeak the antithetic exertion the UK present uses to make electricity.

The investigation takes into relationship the request for sources of powerfulness that tin beryllium fired up instantly specified arsenic gas-fired oregon nuclear, whereas upwind powerfulness for illustration is weather-dependent.

When calculated this way, the outgo to vigor suppliers of buying each the powerfulness they needed successful the 2 years from 2021-22 would beryllium £7.2bn lower, the CTI found.

The investigation besides suggested Europe's astir state powerfulness babelike countries, the UK and Italy consistently paid the highest spot prices during the caller play of precocious state terms volatility.