What are the main factors that have led to increasing energy prices in the UK in recent years? Here we explain all and what you can do.
Inflation is the broad increase in the cost of services and goods in the economy.
Even though the worst of the 2022–23 energy crisis is behind us, energy bills in the UK remain high - and for many, still a major strain on household budgets.
Inflation is lower than its peak, but energy costs continue to be a significant driver of price pressures.
Here’s a clearer picture of what’s happening today.
Main Reasons for Increasing Energy Prices
There are two primary factors that have shaped the energy price crisis.
The Pandemic
The Covid-19 pandemic initially resulted in a dramatic reduction in oil and gas demand.
In fact, in April 2020, oil prices even went negative! In other words, traders were being paid money to house oil barrels. But times have certainly changed since then.
Demand steadily increased as the pandemic wound down, and ultimately, suppliers were not able to keep pace with the speed of change in demand.
Ultimately, this led to increasing energy prices.
The Conflict in Ukraine
Things have gotten worse since the Russian invasion of Ukraine in February of this year.
Some people are surprised considering the fact that we only import 3% of our natural gas from Russia.
So why has this impacted energy costs so much?
Well, if Europe buys less Russian oil, it will naturally have to replace it with imports from another country - for instance, the Saudi Arabia-led Organization of the Petroleum Exporting Countries (OPEC).
That increase in demand for OPEC gas and oil has resulted in a global price surge.
Current Energy Price Reality
Ofgem’s Price Cap (Oct–Dec 2025)
Between 1 October and 31 December 2025, the price cap for a “typical” dual fuel household (using gas and electricity, paying by Direct Debit) is £1,755 per year.
That’s a ~2 % increase (~£35/year) over the previous quarter.
Under the new cap:
Electricity unit rate: ~ 26.35 p/kWh
Electricity standing charge: ~ 53.68 p/day
Gas unit rate: ~ 6.29 p/kWh
Gas standing charge: ~ 34.03 p/day
These figures reflect the average across Great Britain; your local rates may differ depending on region, meter type, and payment method.
How This Compares to Recent Quarters
In July–September 2025, the cap was £1,720 - so the rise to £1,755 is modest in comparison.
Earlier in 2025, from April to June, the cap was £1,849, reflecting a 6 % jump.
Despite the current level, energy bills remain ~ 42 % above pre-crisis winter 2021/22 levels.
So while the extreme spikes have cooled, the new “normal” is still expensive relative to what many households were used to.
Why Prices Remain Elevated (in 2025)
Even now, several factors keep pressure on energy costs:
1. Wholesale markets & global supply
Wholesale gas and electricity prices have eased compared to the crisis peak, but they remain volatile and sensitive to global shocks.
2. Network and infrastructure costs rising
The cost to maintain and expand networks (grids, pipes, wires) is a growing component of the cap.
In the Oct–Dec 2025 cap, network costs rose by ~£24 (compared to Q3) in the breakdown.
3. Policy & environmental levies
Government schemes, environmental programs, and subsidies all feed into energy bills.
In the latest cap, “social & environmental schemes” added ~£17 to the cost component.
4. Changing cost structure - standing charges & fixed costs
Ofgem is proposing to force suppliers to offer lower standing charge tariffs by January 2026, altering how fixed costs are shared.
5. Inflation & broader price pressures
In April 2025 alone, the price of electricity, gas and other fuels rose 6.7 % year-on-year.
The Bank of England sees energy still contributing to inflation in 2025’s quarters.
In short: even though the worst volatility has receded, energy costs are still being driven upward by structural, regulatory, and global factors.
What Support is available for Households?
Warm Home Discount - Now expanded to cover ~6 million vulnerable households.
Ofgem’s standing charge reform - By January 2026, suppliers must offer options with lower standing fees. This could help low-usage households.
Government cost of living programs - One-off payments, targeted scheme extensions, and energy debt support remain in place, especially for vulnerable households. 
Investments in energy infrastructure - Ofgem has approved (tentatively) £24 billion in grid/gas network upgrades between 2026–2031 - this could lead to higher future bills (but also stronger, more stable infrastructure).
Energy Help Guides:
Ways to Keep Your Energy Prices Down
Aside from government support, there is a range of practical ways to keep your energy bills down, they include the following:
General Ways of Lowering Your Gas and Electricity Usage
Here are some approaches to bring your energy bills down:
Run your washing machine at 30° and ensure it's fully loaded.
Only use your dishwasher when it’s full.
Turn off plug sockets when the appliance they’re attached to is not being used.
Pull over your curtains in the evening time to insulate your home better. However, you don’t want to hang curtains over radiators as this leads to heat being funnelled out your window.
Dry your clothes on the washing line where possible.
Ensure your fridge temperature lands between 3°C and 5°C. Ideally, your freezer should be around -18°C, or whichever temperature the manufacturer recommends.
Only fill the kettle up as much as you need at any given time.
Take showers instead of baths, make them shorter, and if you use a power shower, dial down the pressure a bit.
Recommended reading:
Electric Water Heating Tips
Most homeowners use a gas boiler to heat their homes and for the supply of hot water.
However, if you use an electricity-based heater, like an immersion heater, there are steps you can take to reduce your electricity bills by using your immersion heater in the right ways or even making adjustments.
In most cases, you only want to run your immersion heater for an hour or two a day depending on your needs.
If you use an electric shower, less than two hours of usage should suffice to cover your hot water needs for the day.
Next, you should consider whether you are paying more than you should be.
If you are on an economy 7 or economy 10 tariff, the price of electricity is typically much cheaper during off-peak hours, so it’s helpful to try and limit your use to this window.
This is particularly helpful if your home uses an immersion heater to heat water. You can easily set your thermostat timer to reap the rewards of certain energy tariffs.
For example, customers on the Economy 7 tariff can set their timer to only switch the heater on during off-peak hours.
You can also insulate your immersion heater; in which case your water will stay hot for several hours after it has been turned off.
An insulating jacket that is no less than 80mm in thickness. Also, the hot water pipes should come with foam insulation.
You can easily find out the tariff you are on by asking your energy provider.
If your immersion heater doesn’t meet these expectations, you could hire a professional to add these for you, with a total supply cost of around £30 to £40.
Switch Energy Suppliers
Due to the current energy crisis, there isn't as much opportunity to change your current energy tariff to a more competitive deal, but it may still be worth checking.
However, many energy suppliers have closed down and many others continue to refuse to take on new customers at present.
In usual circumstances comparing energy, quotes can be one of the quickest ways to save money on both your gas and electricity bills.
But you also need to be cautious here since energy prices are changing so fast.
Please also note that if your energy supplier were to go bust, you don’t want to switch suppliers or tariffs prior to your account transferring to your new provider.
Long-term solutions
For most people, long-term solutions won’t be of much help right now.
For instance, it costs around £100 per square metre to insulate a property.
However, some long-term solutions are viable thanks to buy now, pay later payment options. For instance, it’s possible to purchase a boiler on finance.
So, if you have an old, inefficient gas boiler that’s possibly on the way out, this option may interest you.
According to the Energy Saving Trust making this upgrade has a significant advantage:
By trading your old boiler in for a modern boiler, you could save around £340 and a whopping 1,500kg of carbon emissions a year.
In many cases, you could pay for the cost of the boiler + installation (around £1,750 to £3,800) over two years and sometimes even longer.
The good news is that zero interest options also exist. But let’s say you do have an interest rate and it comes to 10%.
If you were to pay for a boiler + installation with a 10% interest rate over twenty-four months, you’d probably pay somewhere in the region of £73 to £159 per month.
Moreover, the repayment time frame is also key. If you can secure a deal where you pay for a boiler and its installation over five or even ten years, you’ll probably save quite a bit in the short-term thanks to reduced energy bills.
Also, while most boiler finance deals require a credit check, you’ll likely qualify to buy now, pay later so long as you don’t have any recent CCJs or IVAs in the past five years.
In other words, you may still qualify with bad credit, once your credit history has been solid in the past half-decade or so.
