Household energy bills are rising again. From July 1st, Ofgem’s price cap will increase by 13%, taking the typical annual bill to £1,862. It is the steepest summer increase in four years. The rise comes as unpaid energy bills reach almost £4.8 billion. Households already under pressure must now find even more money, with suppliers and consumer groups calling for urgent reform.
The latest surge in prices was caused by the conflict in Iran and the Strait of Hormuz. However, the impact on British households exposes a much wider problem. The country remains heavily reliant on gas, while renewable power cannot always reach the national network. The solution is there, but of course, it’s not easy. Britain needs to connect more homegrown renewable energy and give network operators permission to install large-scale batteries. Without those changes, global events will keep feeding through to household bills.
In this article, we’ll explain more.
Global shocks hit UK households
The conflict in Iran has disrupted oil and gas shipments through the Strait of Hormuz for four months. Wholesale energy prices have risen sharply as a result. Ofgem’s quarterly price cap initially delayed the full impact on households. That protection ends on July 1st, when higher wholesale costs are passed through to consumers. Bills will remain at the new level until the next cap takes effect in October.
This shows how vulnerable Britain remains to events beyond its control. A conflict thousands of miles away can disrupt global supplies and quickly increase the cost of heating homes here, just as it did after Russia’s invasion of Ukraine, which, of course, is still affecting supply.
Gas also continues to influence the wider electricity price. This means households do not always receive the full financial benefit of lower-cost renewable power generated in Britain. Good Energy has called for electricity prices to be separated from the cost of expensive gas. It supports moving gas plants into a strategic reserve, where operators would receive a fixed payment to run them only as a last resort. Analysis backed by Greenpeace suggests this approach could cut household bills by up to £60 a year. It could also take effect within two years.
The renewables solution
Connecting renewable projects solves only part of the problem. Wind and solar generation do not always match demand. At times, renewable sources produce more electricity than the network needs. Large-scale batteries would allow network operators to capture that excess supply.
This would give the network three important capabilities:
- Release the stored electricity when demand increases or renewable output drops
- Use more renewable power instead of losing surplus generation
- Reduce the need to call on gas-fired plants when clean electricity output falls
Network operators need permission to deploy this storage at scale. Batteries should form a central part of the energy network rather than remain an optional addition. Without sufficient battery capacity, the network must balance supply and demand through other sources. That keeps gas in a powerful position and allows international price movements to affect domestic bills. Storage would make homegrown power more dependable. It would also help Britain gain more value from every renewable project connected to the system.
Looking to the future
The July price rise has prompted calls for immediate help. National Energy Action has called for greater debt relief. Good Energy has proposed more immediate action. It wants the government to shift policy costs from energy bills to general taxation and increase the Warm Home Discount for 6 million vulnerable households from £150 to £450. The supplier estimates the package would cost the Treasury £10.1 billion. This would save the typical bill payer £76 a year, while vulnerable households would save £376. Combined with the government’s recent £150 reduction, Good Energy says its reforms could cut annual household costs by £270. That would come close to Labour’s manifesto pledge to reduce energy bills by £300 by 2030.
These measures could help households facing serious financial pressure. They cannot remove Britain’s exposure to future gas shocks on their own. Solving this issue requires a network capable of using more renewable electricity generated at home. Renewable projects must connect faster. Network operators must also be free to install large-scale batteries and store excess power. The nation has cleaner energy available. But until the network can carry and store it, households will remain vulnerable to global price fluctuations. The country cannot afford to keep paying that price.