A new analysis by thinktank Nesta reveals that rising wholesale gas costs drove nearly 90% of household electricity bill increases in the UK since 2020, and 77% of gas bill increases over the same period. The findings challenge prevailing narratives in UK media and political discourse that attribute energy price rises to the country’s net-zero transition goals.
According to the analysis, typical UK annual household electricity bills increased by £180 in real terms between the fourth quarter of 2020 and the fourth quarter of 2026, with approximately £161 of that rise attributable to wholesale costs driven by gas prices. In contrast, renewable energy contracts for difference are actually reducing electricity bills by £17 under the current price cap. Andrew Sissons, director for sustainable future at Nesta, stated that net-zero policies are “helping to shelter Britain from the impact of expensive gas” rather than driving bill increases.
Network costs, which include electricity transmission and distribution investment, accounted for £72 of the rise in electricity bills since 2020. Government policies and climate initiatives made up a diminishing share of total bills, declining from 16% in October 2020 to 7% in October 2026. The analysis found that wind constraint payments, which frequently receive substantial media coverage, represent only £21 of bill increases and constitute just 4% of a typical annual household electricity bill.
Wholesale costs now form the largest component of typical dual-fuel bills at 44%, while network costs account for 24% and operating costs represent 17%. Since 2020, total dual-fuel bills have risen from £1,175 to £1,723 annually in real terms. Current wholesale gas prices stand at elevated levels amid ongoing Middle East conflicts, reaching 220p per therm as of October 19, exceeding 2022 average levels. Energy officials anticipate further sharp bill increases under the January 2027 price cap in light of sustained high gas prices.
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