As you may be aware, the UK, along with many other countries, is in the middle of an energy crisis, that is only set to get worse. Experts state that 4 million households in the UK already struggle to pay their energy bills. Once energy price caps end in April 2022, energy firms will hugely rise prices further, perhaps more than 50% for many. But why? We looked at the following question: why are energy prices rising so much?
Wind speeds have been low due to the calm weather, therefore wind turbines have not been able to capture enough energy.
It hasn’t been this windless in the UK since 1961, and the situation is only set to worsen as the temperature drops for the winter.
Summer heatwaves across Europe increased demand for air conditioning and refrigeration/ This depleted backup energy supplies. The supplies for the UK diminished also as a result of last year’s unusually cold winter.
Gas-fired power plants provide half of the UK’s electricity, and a string of nuclear reactor outages forced several suppliers to shut down. Many governments also decommissioned coal-fired power plants in favour of green energy, reducing Britain’s backup supply.
Due to a recent spike in domestic demand, Russia has reduced its shipments to Europe. Prices rose as a result of greater competition from Asia, which has seen colder weather in recent months. Increased post-lockdown activity has also increased the demand for electricity.
Many small energy providers have already closed their doors due to their inability to keep their price promises. Winter energy bills are set to hit their highest levels in ten years, putting half a million more families in danger of falling into fuel poverty.
If an energy company goes bankrupt as prices rise, the energy regulator, Ofgem, will ensure that a supplier still provides homes with electricity and gas.
In August, officials expected that default energy rates would climb by 12.5%, as well as fixed pricing.
Every six months, Ofgem reviews the energy market price caps. Recently, it announced a £139 rise to the cap in response to supply changes. Many experts predict this increase will affect 15 million individuals in the United Kingdom.