Stories

Tue, 21 Jul 2026

Tue, 21 Jul 2026 Three reasons why UK electricity prices are so high

The government has announced it will cut VAT on domestic electricity to zero but Britons still pay more for power than many other European nations.
1. Wholesale cost set by gas generators: Even if gas only generates a small percentage of overall electricity, it can often set the wholesale price, which gets paid to every type of generator. This is because the wars in Iran and Ukraine have increased the cost of gas. 2. UK's reliance on natural gas: 31% of the UK's electricity was produced from burning natural gas in 2025, compared with just 3% in France, where nuclear power generates most of its electricity (69%). The US has a higher share of natural gas in its electricity mix, but American wholesale gas prices are lower due to shale gas production. 3. State subsidies and national grid network costs: State subsidies for wind and solar farms have pushed up bills, as have national grid network investment costs, which have increased by £113 since 2019-20. Network costs are projected to rise further by 2030, adding another £48 to a typical bill.