Wholesale gas prices remain the dominant driver of rising electricity bills in Britain, according to new analysis from the UK Energy Research Centre.

UKERC found that 66% of electricity bill increases between 2021 and 2025 for a typical household were caused by wholesale gas prices.

Over the period, typical electricity bills rose by £169 in real terms.

Of this increase, £112 was driven by wholesale fuel prices, £28 by higher network costs and £22 by policy costs, with the remainder linked to wider impacts of the energy crisis such as customer debt and supplier failures.

The findings challenge claims that net zero policies are the main cause of high power prices. UKERC says the British electricity market is still largely set by the price of gas.

In 2025, gas set the price of electricity 90% of the time. UKERC projects this will fall to 60% by 2029 as more renewables with fixed price contracts enter the system.

UKERC Director Prof. Rob Gross said:

“The link between wholesale price of gas and electricity price continues to be the most significant factor in the price increases consumers have seen over the last few years.”

The analysis suggests further reforms could accelerate the de-linking of gas and power prices.

Older renewable schemes are currently paid the wholesale price plus a subsidy, although the Autumn Budget moved 75% of those subsidy costs off household bills.

UKERC estimates that moving all renewables to fixed price payments could save the Treasury and industrial consumers up to £8bn per year.

Prof. Gross added: “Government is rightly committed to reduce reliance on volatile fossil fuels. UKERC is seeking options to accelerate the benefits, which is why we argue for a new contract for older renewables. Like a fixed-price mortgage, this can help provide predictable prices for households and business alike.”

The findings are published in the UKERC Review of Energy Policy 2025.

The review also examines issues including grid flexibility, gas network reform, critical minerals supply and the role of biomass.