The Cost of Electricity in the UK : Drivers, Challenges and Opportunities for Reform

Abstract:

With the UK facing its second energy crisis in five years, debate around how to reform domestic electricity prices is back in full force. The high cost of power adds to the cost-of-living crisis and makes the planned electrification of heating and transport more challenging. The conflict in the Persian Gulf has exposed, yet again, how vulnerable UK energy prices are to geopolitical events and has made concerns more acute and urgent.

This UKERC Briefing Paper, produced as part of UKERC's Whole Systems Mission on Energy Bills, provides an analysis of the drivers behind high electricity bills, the expected trajectory of bill components through 2030, and the policy and market reforms that could meaningfully reduce costs for UK households. It draws on a decade of Ofgem energy price data, original UKERC analysis, expert workshop findings, and a wide body of grey and academic literature. It lays a foundation for our subsequent work to explore specific options and a package of reforms.

Publication Year:

2026

Publisher:

UKERC

DOI:

https://doi.org/10.82226/543.p.000011

Author(s):

Camacho-McCluskey, K., Carmichael, R., Rhodes, A., Gross, R. and Blyth, W.