Energy prices to rise again by 13% in October 2021


How Much Electricity Could Your Home Generate

 

 It may be time to consider protecting against rising prices and electricity usage and own your own energy supply.

Ofgem has proposed an increase to the energy price cap of £150 per household per year. A rise of 13%. (Source).

Confirmation of a decision is expected on August 6th 2021.

This follows an increase of £96 per household in April 2021 - a rise of 9.2%.

 

Two large increases in one year.

23% rise in energy prices in 2021 alone.

This is due to the rising cost of wholesale electricity prices. While Ofgem did enforce a small reduction in the price cap as the coronavirus pandemic hit wholesale energy prices, now demand is rising again - so are energy prices and therefore so is the price cap, which ensures a fair price is paid for energy.

Wholesale Electricity Prices in 2021 (Ofgem)

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Wholesale electricity prices continue to rise

Driven by the cost of gas and other fossil fuels.

Pent up demand and supply disruption may also be playing their part.

 

UPDATE: September has seen prices higher than £150/MWh. That’s 200% higher than when this article was written.

 
 

New Electricity Tariffs 2021 Big Five + Octopus (Written before the huge wholesale price increases).

*Prices are accurate on 03/08/2021

British Gas (Home Energy Secure. Fixed for 26 months): 20.68p per kWh

E.ON (Next Exclusive 2 Year fixed): 20.07p per kWh

EDF Energy (Simply Online 2 Year Fixed): 19.75p per kWh

SSE (2 Year Fixed): 20.65p per kWh

Octopus Energy (Octopus 24M Fixed): 20.80p per kWh

ScottishPower (Fixed Price December 2022): 21.71p per kWh

Average new electricity price: 20.61p per kWh.


Are electric vehicles affecting electricity prices already?

Cumulative number of plug-in vehicles registered in the UK

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The exponential growth of EV’s will certainly have an impact on electricity prices. In just two years the number of plug-in vehicles on the road has doubled. Expect that trend to accelerate as new EV’s take a larger market share.

 

V market share of new car registrations in the UK

 

The government has announced a ban on sales of new petrol and diesel vehicles by 2030 so expect the graph to keep climbing.

This will feed the exponential growth of electric vehicles on the road - increasing demand for electricity. Now might be a good time to install solar panels and own a large proportion of your energy supply.

Annual+market+share+of+EV+UK.png

How do current electricity prices compare historically?

Wholesale+electricity+prices+exchange+data.png

Nord Pool Group run the largest power market in Europe. To get up to date price information we need to look here.

In July 2021 we can see electricity prices are almost double other July prices within the last 7 years.

More strikingly, we can see day-ahead wholesale electricity prices are currently 50% higher than at any time in the past 7 years and prices are still climbing.

This should be a concern.

 

UPDATE: While the price of gas and the intermittency of wind is the primary driver of the record energy prices we are currently seeing, expect electricity demand to keep climbing as more electric cars are added and more homes switch to heat pumps. Price rises may be more long term than people currently think.

 
 

Written by Thomas Moyes, owner of Leoht Ltd.

Biography

I have a Galileo Master Certificate in Solar Photovoltaics and Energy Storage from the European Institute of Technology and a Master’s degree in Finance.

I’m passionate about the potential for every homeowner and business in the UK to become energy self-sufficient with cheaper renewable energy.