Thursday, September 19, 2024

Why high energy bills are the ‘new normal’ in Britain

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For now, high gas storage levels in Europe have helped to calm nerves. Bradshaw notes that the EU has mandated gas storage targets, unlike the UK which lags behind.

Yet even storage is a double-edged sword. Ben McWilliams, a fellow at think tank Bruegel, points out that storage targets force countries to buy more gas than they need and keep prices higher than they would usually be over the summer.

“Europe tries to fill its storages quite aggressively, in a way that didn’t used to happen,” he says.

Another more permanent feature of our energy bills are green levies, which could add more to bills in the coming years as net zero targets come into focus.

McWilliams says: “Costs shift away from being operational costs, which is a gas-fired power plant where you’ve got to pay for each molecule of gas you put in, towards capital cost, where it’s all a question of building renewable plants and a substantial electricity grid to move this all around.

“Inevitably that means energy bills will increasingly shift towards fixed levies.

“A lot of the low-carbon electricity that’s being built is cheaper to generate, but we’ve got to build the electricity systems that are supported.”

Pensioners will feel the pinch this winter but it will not be for the last time.

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