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UK energy bills to rise despite growing role of renewables in the electricity system
1/6/2026
News
The UK energy price cap will rise by 13% as wholesale gas volatility continues to affect household bills, despite the continued decarbonisation of the electricity system.
UK household energy bills are set to increase from July after regulator Ofgem confirmed the energy price cap will increase by 13% amid higher wholesale gas and electricity costs. The move will add around £221 a year to a typical household bill.
Ofgem said higher wholesale energy costs accounted for most of the increase for households on standard variable tariffs.
Energy consultancy Cornwall Insight has warned bills could rise again later in the year if wholesale market pressures persist, particularly after renewed instability in global gas markets linked to tensions in the Middle East.
Trade body Energy UK said the increase would place additional pressure on households already struggling with energy affordability.
National Energy Action, which campaigns on fuel poverty, warned vulnerable consumers would be disproportionately affected by higher bills.
The Energy and Climate Intelligence Unit (ECIU) said rising gas prices linked to instability in the Middle East were continuing to feed into household energy costs because gas can still play a disproportionate role in setting wholesale electricity prices.
However, the situation continues to change, as renewables account for a larger share of UK electricity generation.
Recent analysis commissioned by UK energy firm Drax said the UK grid came close to fossil-fuel-free operation for sustained periods during April as high renewable generation reduced demand for gas-fired power generation.
The company also said the UK is now the most interconnected large power system in Europe, with interconnectors allowing electricity to move between the UK and neighbouring markets when supply and demand conditions change.
According to the report, written by Imperial College London researchers, growing interconnection capacity and the ability to shift electricity demand could play a larger role in balancing future low-carbon electricity systems as renewable generation expands.
It also suggested major power consumers, including AI data centres, could help balance the system by shifting some electricity consumption away from peak periods or towards times of high renewable output.
Wren Kitchens’ rooftop solar installation in Barton on Humber is said to become the UK’s largest, at 6.6 MW capacity, once some 13,000 panels are installed
Photo: Wren Kitchens
