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%.
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 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.
*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.
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.
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.
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.