Why are wholesale prices so important? The wholesale market is where suppliers buy the energy that they give to customers. This cost to buy energy makes up a large chunk of every customer’s bill which means when the markets change significantly, customers bills go up.
October 2021: Wholesale costs have kept increasing, with prices now more than double what they were in April. There are some key factors that are driving prices up, namely:
Our global dependence on expensive, polluting gas. Despite an ever growing share of the UK's power coming from renewables, we're still far too reliant on gas (most of it imported) to heat our homes and generate electricity – 39% of Great Britain's power still comes from burning gas.
The amount of gas we are getting from Russia has been much lower than usual; this means that the amount we have stored here in the UK is low. Worldwide energy supply using hydropower has taken a hit because of droughts in places like China and Brazil, this means gas is in higher demand, and more competition means higher prices.
Here in the UK we have too few wind turbines and recent low wind levels have driven more use of gas and even coal - sending wholesale gas and electricity costs skyrocketing.
Another factor which has been increasing the wholesale prices are rising carbon offset prices. These are allowances that are purchased by companies who generate fossil fuels to offset there emissions. The price of these offsets are higher than ever, meaning the companies generating power from fossil fuels are paying more money and passing this cost on to customers.
These conditions have only gotten worse throughout 2021, leading the energy regulator Ofgem to increase the UK’s energy price cap by £139 a few weeks ago. Suppliers across the board have had to adjust their energy tariffs to match their higher costs.
These increased wholesale prices are translating into higher bills for the end user - it has never been more important to make sure your home is efficient - wasting energy when the cost is so high is just not an option and can mean real fuel poverty for struggling families.
The government's ECO scheme is still running, and if you qualify you can take advantage of subsidised heating and insulation measures. Keeping the heat in will keep the bills down. If it has been years since you had insulation, the chances are your home isn’t up to current standards.
Give Direct Savings a ring today, or contact us via our live chat or contact form, and we will be happy to advise what measures you could have funded to make your home more efficient