Gas-Fired Generators Reap Billions Amid UK Energy Crisis

Researchers at University College London (UCL) have found that UK electricity costs rose by £4 billion in 2021 and £6.6 billion in 2022 due to high profits made by gas power stations.

The estimated profits for gas-fired generators increased from around £500 million annually before the energy crisis to £2.9 billion in 2021 and £4.7 billion in 2022, with a profit margin of 19% in 2021 and 18% in 2022.

The high costs faced by gas generators were largely due to rising natural gas prices during the energy crisis. However, the researchers found that electricity prices increased more than the rise in gas costs, resulting in additional costs for households and businesses.

According to the report, gas power stations set the wholesale electricity price in 98% of price-setting events in 2021, contributing to higher prices across the economy. The researchers also noted that electricity trading between Great Britain and continental Europe had an impact on profits during the crisis.

Simon Skillings, energy systems specialist at E3G, stated: 'These enormous profits are a result of how Britain has designed its energy market.' He emphasized the need for a fundamental overhaul of the energy system to ensure affordable clean energy for all families and efficient planning and financing for power companies.