Why do energy prices rise and fall?

Energy prices in the UK rise and fall due to key factors, both global and domestic. This has a direct effect on our home costs.

Supply and demand influence the price

Cold winters or hot summers can increase demand for heating or cooling, which drives up prices. Milder weather can reduce demand, leading to lower prices.

Disruptions in gas supply from producers can spike prices

The UK relies on natural gas for electricity and heating. Global fluctuations in the price of gas, often influenced by supply and demand, political tensions, and the weather, can lead to energy price changes; for example, disruptions in the gas supply from producers such as Russia or the Middle East can lead to price rises that are passed on to the customer.

Infrastructure costs can push the price up

The cost of maintaining, upgrading, or expanding energy infrastructure, such as power stations, grids, and pipelines, can be passed on to consumers. This, of course, has an impact on energy prices. According to the Telegraph, British companies are paying the highest electricity prices in the developed world, according to official figures.

Can solar panels help with home running costs?

Solar panels can help reduce your electricity costs by generating your own electricity from sunlight, which decreases your reliance on the national grid. If you want to explore the range of solar panels Gloucester, you can get in touch with companies such as gsmlimited.com/services/solar-panels/gloucester. While there is an upfront cost for solar panel installation, they can result in substantial savings on your electricity bills over time. The average UK household can save hundreds of pounds per year, depending on factors such as energy consumption.

Government policies and taxes

Policies around carbon emissions and renewable energy targets can also influence the price. Taxes aimed at reducing carbon emissions can make fossil fuel-based energy more expensive.

What about exchange rates?

As the UK imports a portion of its energy, exchange rate fluctuations can affect the price. A weaker pound makes energy imports more expensive, which drives prices up for consumers.

Niru Eilish