Public procurement of electricity could save GB households £200 a year, says thinktank
Summary
A thinktank says the UK government could save households in Great Britain about £200 a year on electricity bills by becoming the only buyer of electricity before reselling it. This change would reduce the current system where gas prices, which can be very unstable, control electricity costs for consumers.Key Facts
- Public procurement means the government buys all electricity first and then sells it to consumers.
- Currently, gas prices set electricity prices for 80-90% of the time, even though gas generates only about 25% of power.
- Energy bills are expected to rise by over £200 in July due to the Iran war increasing gas prices.
- The thinktank’s plan would create contracts where gas plants act as a backup and renewables and nuclear power are paid fixed prices.
- This model would stop gas companies from charging high prices when gas is scarce.
- Over five years, if gas prices stay high, households could save a total of £74 billion; if prices fall, savings could still reach £41 billion.
- The government expects gas to have less influence as more renewable energy projects start under fixed-price contracts.
- Savings would also come from encouraging electricity use during cheaper times and investing in battery storage.
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