Britain is once again paying the price of an energy system that is more effective at extracting profits than delivering security. Illegal war and geopolitical disruption are sending fossil fuel prices soaring – and because our electricity market turns volatile gas prices into higher electricity bills, families here risk paying the cost. The government is already unpopular. How it responds to this crisis, and the wider crisis of affordability, will define its legacy. Its instinct has been to double down on clean power. That has strong merit – but understanding that strategy’s limits shows why deeper reform is urgently necessary.
The government’s goal is clear: achieve stable prices by removing gas from the grid. Britain’s electricity market uses a marginal pricing system, which means that the price paid for all electricity at any moment is set by the most expensive source needed to meet demand. Even though gas produces only about a quarter of our electricity, it sets the price around 85% of the time. That means even when renewables are generating most of the country’s power, your bill doesn’t reflect the cost of solar or wind. And because gas is a global commodity with the price set by the international market, the closing of the Strait of Hormuz translates into rising electricity bills in Hull – even as the horizon grows thick with wind turbines and the share of clean power on the grid grows every year.
