The UK Government has announced new measures aimed at protecting households from sharp rises in energy bills by reducing the influence of gas prices on electricity costs.

At present, the price of electricity is often set by the cost of gas, even though a significant share of the UK’s electricity comes from cheaper renewable and low-carbon sources. This means that when global gas prices rise, households can still face higher electricity bills.

To address this, the Government plans to introduce long-term fixed-price contracts for renewable and low-carbon electricity generators. These contracts are intended to stabilise prices and prevent generators from benefiting from higher gas-linked rates when costs spike.

Around 30% of Great Britain’s electricity supply is still exposed to gas-driven wholesale pricing, leaving households vulnerable to international market shocks.

The proposed changes aim to:

Reduce the link between volatile global gas markets and electricity prices
Provide greater price stability for households and businesses
Better protect consumers during future energy crises
The Government says these reforms build on the growth of renewable energy, which is already helping to reduce reliance on gas, but acknowledges that further action is needed to fully shield consumers from price volatility.

Overall, the intention is to create a more stable and resilient energy system, where electricity prices better reflect the increasing share of cheaper renewable generation rather than being driven by fluctuations in gas markets.

Read the full announcement here https://bit.ly/Unlinking-Gas-and-Electric-Prices