UK energy bills remain high despite rising renewable sources as gas prices dictate costs

The UK is facing a second increase in energy price caps this winter, with bills remaining high despite over 40% of electricity coming from renewables. Gas prices still dictate electricity costs due to the marginal pricing model, which sets prices based on the most expensive source used. Centrica has reported low gas storage levels amid cold weather, raising concerns about energy security. Although wholesale gas prices have decreased from their 2022 peak, they remain significantly higher than pre-COVID levels, contributing to ongoing high energy bills. The government is considering a new zonal pricing model to address regional disparities in electricity costs. This could allow areas with more renewable energy to have lower prices, but concerns exist about potential impacts on investment in renewable projects.