Sarah Montague of BBC Radio 4’s World At One programme on Monday April 14th 2025 interviewed Adam Berman, Director of Policy and Advocacy at Energy UK, the trade body for energy firms, and quizzed him about why the UK has such high energy prices.
Berman’s answers were quite revealing. It seems the real culprit has been hiding in plain sight: it’s because the Government is using a tax to prevent renewable electricity producers from benefiting from the difference between the high price of electricity (set by gas) and the cost of producing it from renewable sources (negligible on a day-to-day basis). Fair enough: but, crucially, the Government is then failing to pass the money it makes from this scheme onto consumers, meaning we keep on paying the high price while the Government pockets the savings due to the renewable sources.
Here’s the exchange in full.
AB: In some ways we’ve been a victim of our own success which is that we’ve done a fantastic job of getting rid of emissions from the electricity sector in the UK. We’ve got rid of about four-fifths of our emissions since 1990. The vast majority of that has come from a shift coal to gas power stations because gas, when you use it for combustion, it has about half the emissions of coal. The tricky thing is the way our electricity market works, which is that gas makes up about a third of the electricity we generate in the UK on an annual basis, but it sets the price the majority of the time. And that’s because if you look at any given hour you might have lots of different sources of electricity into that; you might have some wind, some solar, some nuclear, but they’re usually not enough to fill every minute in that hour and so you end up having a bit of gas or a lot of gas, depending on what the weather conditions are and, like any international commodity market around the world, it runs on what’s called ‘scarcity pricing’, and so you end up with that final bit of generation setting the price for the whole generation.
SM: So, even if a tiny amount is used, its unit price is what sets the price for much cheaper ways of getting it?
AB: That’s correct.
SM: So, the charge that it’s because of the dash for Net Zero, that that has seen energy prices rise, is that correct?
AB: No, I mean, if you look at the way electricity prices have moved up and down over the last few years, it is correlated almost exactly with what the international gas prices do. Actually, if you look at the energy crisis from 2022, 2023, it wasn’t really an energy crisis, it was a gas crisis. The government had to spend about £100 billion supporting homes and businesses across the country from cripplingly high energy bills, all because gas was so expensive.
SM (garbled): So, over time they’ve all [sic] this clean energy comes in – are they benefiting from clean energy but they’re getting paid for more expensive gas?
AB: So, that has been a problem historically and through the energy crisis the government looked at that because, as you say, they had very low operating costs on a day-to-day basis if you have a wind turbine out in the North Sea, but you might be benefiting notionally from the higher cost of gas which sets the price of electricity. So, there’s actually a standalone tax that addresses that difference which is there to this day which [the] Treasury has refused to this day to [unintelligible] and use to bring down people’s bills.
SM: So, they’re not necessarily benefiting from [it], or at least entirely, but the Government is?
AB: Exactly.
SM: OK. So, that brings us to… there was a review into reforming the pricing in the electricity market. I know there were two consultations. Where do we get to with that?
AB: So, part of this big consultation process, how you look at the electricity market, how you reform it to make it fit for the future, was thinking – what can we do around pricing? And there were these proposals on the table, we split out the electricity market, you have the clean stuff over here, you have the dirty stuff over there, and you make sure the clean stuff sets the price for the majority of the time. To be really honest, the government (and by government I really mean officials) spent the best part of two years looking at this and they couldn’t quite figure out how to have it done. There’s no electricity market round the world which works in that way. It’s very hard to differentiate between these different clean technologies. They all serve slightly different purposes. You have flexible intermittent renewables… you might have your wind turbine going when the wind is blowing. You might have nuclear but that’s baseload. All of these do slightly different things so in practice it’s really hard to differentiate and so what they concluded as part of that consultation process was that the best way to get bills down in the longer term was to ensure that we move rapidly towards clean power as quickly as possible. And so you’re moving to a point where more and more hours of the day, hours of the year, you can have clean power setting 100 percent to the price.
SM: And so, we might continue with the point where you’re using a tiny amount of gas but it’s still setting the price, but there’ll be more days where it’s 100% green?
AB: Exactly. The only complication here, and it’s important to be honest, is this is going to take time, like any long-term infrastructure project, the full benefits of clean home-grown energy are going to take to enable a fundamental change in energy pricing and, you know, for the most part, when we look at…
SM How long?
AB: …projections of energy prices. Well, you know, probably the early 2030s realistically. I mean, this will happen over time.
SM: Is there any reason – you talk about hypothecating – what the Government takes in tax could be just recycled back in to lower the price?
AB: There’s no reason why that couldn’t be done.
A cynic might wonder if, having established how much UK homes and businesses can be fleeced charged for energy, exactly how or why prices will ever be allowed come down. Especially if there’s a tax in it.
You can listen to the interview here. Crank forward to 18:45 in.
Stop Press: David Turver thinks Berman’s got his figures wrong. Read his response here.
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Losing the will to live through all this energy weasel-wordry and word-saladry – which curiously omits the hundreds of years’ worth of coal lying beneath our feet, that China would exploit and our energy wonks despise.
Director of trade body for energy firms interviewed in home of BBC Verify – personally I prefer to trust David Turver’s latest conclusions…
https://dailysceptic.org/2025/03/17/why-are-electricity-bills-going-up/
“…We can see that the direct and indirect costs of renewables have been the biggest drivers of increased electricity bills since 2019. Increased gas prices have also played a part in this rise, but there is reason to believe gas prices will fall with easing global tensions, and even more reason if we were to lift the damaging bans on new gas drilling.”
As David also points out in another recent posting – Government Seeks Advice on Crimes Against Thermodynamics.
A number of suppliers sell into a market. The overall demand varies somewhat but is fairly predictable. Some suppliers can sell all the time, others are intermittent. Naturally, when the intermittent suppliers are absent, demand exceeds supply and the price soars.
We are very close to the point where the demand can’t be met by the reliable suppliers : we will have rolling blackouts when the wind isn’t blowing.
Possibly, unless it is realised that we need 100% backup to avoid this at which point the whole renewables sector can be allowed to decay to nothing and not need replacement.
And indeed a number of big renewable projects are getting cancelled now
I see. So it’s nothing to do with how we produce our electricity then? Just a coincidence that, for example, the USA has lower prices than, for example, Germany?
Not strictly relevant. It’s the market pricing mechanism that’s causing the damage. All prices linked to top gas price, so top gas prices disguise the real cost of all other sources of energy. Only a civil servant could come up with such a cockammammy/devious scheme. When gas is bought below top price, who gets the extra profit, is it the generators, or? The article says ‘tax’ but is that true – how does that work?
US gets a lot of its electricity from gas
The whole picture.
If gas is supplying power – intermittently because it has to give way to wind/solar when conditions favour them, and also biomass (which is subsidised) – only 35% of the time, it is still operating 100% of the time as it must be on constant back-up, incurring operating costs including burning gas.
In order to cover its total costs and make a profit it has to make up for no revenue for 65% of the time by increasing its prices for that 35% of the time it can sell. This has little to do with the market price of gas which has always been volatile.
Fossil fuel users have forward contracts – specifically to smooth out market volatility – so they do not have to rely on spot market prices.
Brief peaks in gas prices therefore have little effect on the price of gas generated electricity. The problem is having unsustainable supply as a significant part of the mix.
And as gas is phased out, this problem will increase as fewer gas generators are in the mix – and most likely to the point where gas generating companies shut down as being unprofitable and the grid will become unstable. So what then? Subsidies for gas or…. Nationalisation of the electricity system. Won’t that be great?
Pinning the problem on gas generation, market gas prices, Putin, fairies at tte bottom of the garden, etc is to distract from the real problem – Net Zero and unreliable, unsustainable so-called “ renewables”.
That “cockammammy/devious scheme” of prices being determined by the predominant source has been in operation since last century, but worked because then the mix was coal (50% plus), gas, nuclear – in that order – which gave continuous, dispatchable output.
Supply could be planned to meet anticipated demand and variability in demand, therefore cheapest supply could be scheduled into the mix and adjusted as required – the method worked reasonable well.
Nowadays, although demand can be anticipated, supply to meet it cannot be planned with unreliable wind/solar in the mix, so least cost supplier cannot be scheduled, and that pricing system cannot work in a situation for which it wasn’t designed.
The point which perhaps wasnt recognised enough is that the price is inevitably the highest (scarcity) price rather than a more sensible price if you contract for a regular quantity of gas. There may be occasions where this is the most economical way of doing it but I suspect it actually means that top price is being paid most of the time.#
Perhaps a better way would be to run a gas baseload in the same way that nuclear does and use dispatchable renewables like wood chips to compensate for the shortcomings of wind and solar.
But of course wood chips, although renewable, aren’t really green at the point of use are they?
You’d need a lot of trees to compensate for the shortcomings of windmills.
Local trees too, not ones in another continent.
Has he not heard of CFD. The fact that massive subsidies are paid under the scheme makes a mockery of the cheap renewables mantra.
He knows perfectly well – it’s a case of “look at this hand, keep looking at it… ignore what the other hand is doing”
The expression “clean energy” as used by these morons just drives me mental.
Unbelievable.
If you ignore all the costs of building low energy gradient generation such as wind and solar then of course the instantaneous cost of that power generation is low, but if you amortise its total costs over its much shorter life than that of traditional power generation plant then it is much less competitive and still requires 100% backup for the cold, windless, dark weeks and months.
Renewables are unreliable and therefore useless to a modern economy that needs continuously available electric power.
The whole arrangement is a gigantic con and sooner or later the whole thing will collapse in a heap.
I object to his use of the term clean stuff and dirty stuff. The life giving gas Carnon Dioxide is clean and always has been
In Britain you used to say don’t mention the war, nowadays the unspoken injunction appears to be don’t mention wind droughts. Why not?
Wind droughts are usually called Dunkelflautes in Europe because they are often associated with overcast conditions (still and dark periods.) They are the elephant in the room of the net zero program because wind droughts and the lack of grid scale storage together destroy any chance of making a transition from conventional power.
If wind droughts were taken into account, no sane and responsible government would have allowed wind and solar power onto the grid. Neglect of wind droughts and the pursuit of net zero in the west has caused the waste of trillions of dollars to get more expensive and less reliable power with massive losses of forests and farmland. The evidence is stark and clear in Britain and Germany.
You must be aware of the scandal a few years ago when we found that the green wreckers on the climate change committee and deliberately lied to the government about wind droughts, citing one year of data when there was no serious Dunkelflaute.
The consequences of that deception and the bipartisan acceptance of the climate fraud and the suicidal net zero solution has got you where you are and there is no way out until you get rid of the subsidies and mandates for intermittent energy and burn coal and gas until nuclear power can compete.
Perhaps the first step is to promote “wind literacy” so that the voting public can understand what has gone wrong and why it happened.
The meteorologists never issued wind drought warnings and it was left to independent Australian investigators to find them 10 years ago but nobody in officialdom at home or abroad took any notice. Surprisingly the conservative groups who are most opposed to the green folly have not taken up the best weapon we have to turn the tide.
These are some of my contributions.
https://www.flickerpower.com/images/The_endless_wind_drought_crippling_renewables___The_Spectator_Australia.pdf
https://rafechampion.substack.com/p/the-late-discovery-of-wind-droughts
https://open.substack.com/pub/rafechampion/p/we-have-to-talk-about-wind-droughts
https://www.flickerpower.com/index.php/search/categories/general/escaping-the-wind-drought-trap
Wow. Total misinformation.
Gas is not more expensive than renewables. The problem is the way our electricity market works, which is deliberately designed to push out fossil fuels.
The government basically agrees to take all the electricity that wind power producers can make, at a guaranteed “strike price”. If there is a shortfall, gas is used to make up the difference.
This means the gas power stations are constantly started up and shut down again. This both makes them inefficient, and means their capital cost is spread over fewer units of electricity.
And in any case, it means gas is only used when electricity is relatively scarce (eg the wind drops), ie when electricity is expensive.
Add to that green taxes, and emission permit requirements on to, and you literally have a market that is rigged against gas.
I would have more respect for so-called environmentalists of they were honest about this and didn’t constantly lie about it.
Your explanation makes sense – our electricity supply isn’t really a market at all it’s a utility like the road system, planned and managed by a government department. The article doesn’t explain why gas prices determine (as distinct from influence) the consumer price of electricity whereas you do so. It’s politics as usual – the goal of which is to shift us from fossil to renewables. What the article has done for me is raise the possibility that renewables may within twenty or thirty years bring cheaper electricity. If this isn’t just a pot of gold at the end of the rainbow then the battle is about using the benefits to give us a competitive advantage in world trade instead of wasting it on social programmes at home or abroad.
Not sure why it’s made you think renewables could drive cheaper electricity? – if we always have to double up using real dispatchable plant, why not just use that instead full time? (That also doesn’t need subsidies to survive). over the 20-30 years you mention, most renewables will have had to be replaced 2-3 times, average nuclear plant can last 60+ years…
So….. looks like a scam; smells like a scam …… and IS a scam is absolutely correct.
It seems to me the Director of Policy and Advocacy at Energy UK doesn’t know how the energy market works… He’s saying solar/wind energy is cheaper than the conventional sources?!? The opposite is the truth. That’s why pretty much all green energy projects are heavily subsidized, either via ROCs (Renewable Energy Certificates) or CfD’s (Contracts for Difference – I think this is what he refers to when he is talking of a tax – it is not a tax, it is a fixed price swap which means that depending on the market price green energy firm pay or receive money so that overall they get a fixed rather than a variable/market price).
And yes, once built, solar/wind farm have low daily operating costs, but they also have to recoup the initial investment of building the farms. So overall their cost of production is higher than gas. Hence the subsidies to incentivise investors to put money into building these renewable energy projects. Without the subsidies, they wouldn’t be economically viable. So these are politically driven and subsidised investments, not free market economical ones.
And let’s not forget that the environmental impact from the construction of wind farms is obscene compared to gas, they are horrendously difficult and expensive to maintain in the middle of the North Sea, and as a result only last 15-20 years or so before they need scrapping and building again. If Reform manage to stop the subsidies it is highly likely that they will stop this stupidity. Where are they going to bury the millions of tonnes of chopped up carbon fibre blades?
Solar panels likewise.
I see others have also commented. This article unfortunately trots out the nonsense that electricity prices are ‘set by gas’. This is not the case, and it plays into the hands of the grifters that want to promote Net Zero and the impoverishment that will continue to come from this.
I highly recommend reading David Turver on this subject: https://x.com/7Kiwi/status/1912404705671553125 and also on substack: https://davidturver.substack.com/p/renewables-misinformation-bbc
“By ignoring the giant bull elephants in the room representing renewables subsidies and the extra costs of grid balancing, backup and expansion of the network, Berman was allowed to paint a false picture of the drivers of high energy bills. The truth is that renewables are the major force driving bills higher and if Miliband gets his way with CP2030, then our bills will rise higher still“.
As an English lit bachelor ( from way back) I found this article not conducive to a students ongoing understanding of life, other than perhaps an amature attempt to fool the listener ( reader) into blindly letting this new form of criminal activity become acceptable.
The truth but not the whole truth and nothing but the truth.
So… what is the Contract for Difference (CfD) scheme which guarantees wind/solar prices as high as £128 per kWh and Constraint Payments which have cost £400 million last year paid to wind/solar not to supply when conditions are favourable because the demand isn’t there?
And what about the carbon tax levies on gas but not wind/solar?
Gas prices have always been volatile so why is this suddenly a problem? It isn’t – because whilst gas prices peaked briefly during the Russia/Ukraine drama, they dropped, the electricity prices didn’t.
High electricity prices are due to intermittency – the inability of wind/solar to provide power as and when needed and continuously.
Gas power stations are obliged to give way when wind/solar conditions are favourable but must maintain the capacity to rejoin the grid within a few minutes notice, and support wind/solar to maintain frequency – which involves burning gas but not selling electricity during this period.
Therefore gas power stations do not get a continuous revenue stream to cover their expenses and make a profit. Therefore when they are supplying, they load their prices otherwise they would go bankrupt. Their prices then determine the prices charged by wind/solar and nuclear.
Wind and solar suffer from non-continuous revenue stream so they too must load their prices when able to supply – which brings us to CfD and constraint payments to “overpay” wind/solar to stop their bankruptcy and perpetuate the Net Zero folly.
Then a substantial proportion of electricity comes via the European interconnector where prices can go as high as £1030 per kWh.
We are paying for intermittency. Get rid of wind/solar, bring back coal, have a coal/gas mix, get rid of intermittency and enjoy a continuous, sustainable supply and we would have cheap electricity again.
Note: “renewables” = mostly biomass, hydro, and notionally power via the interconnector which supposedly is surplus wind/solar/hydro from European Countries. Only a small proportion comes from UK wind/solar.
Excellent summary.
This is basically BS. Our respective Governments have managed to produce a farcical response to our country’s energy requirements. Inadequate, inefficient, unreliable, unsafe, insecure and prohibitively expensive.
All based on pretending the premise that Carbon Dioxide is a threat to our planet.
The lies come from vested interests, big snouts in the trough, sucking up £Trillions of taxpayer’s money to produce environmentally disgusting, obscenely expensive, and woefully unreliable bird mincers and whale scarers, which the Greens don’t seem to give a damn about.
There is absolutely nothing good about Net Zero policies. This Government is proposing to spend £30Billion of our money on Carbon Capture and Storage! An utterly, utterly useless, pointless waste of time and money that will make no difference to the climate whatsoever but enrich these Green scammers with £Billions. Sabotage/ treason, call it what you want. They should be arrested. Our own worst enemy couldn’t do a better job of destroying our country and livelihoods.
They are literally ‘farming’ subsidies, and occasionally make a few quid from selling some electricity in the middle when they aren’t being paid for not producing or switching off to avoid over-producing. At this stage I think we’d be better off with a real enemy, at least everyone would be 100% clear they wanted to destroy us
Energy UK is an unreliables front and everything Berman said was complete rubbish but since this was a BBC interview with one of their ignorant presenters none of his lies were called out as the giant elephant called ‘subsidies’ thrashed around the room. The whole thing should have started with ‘there now follows a propaganda broadcast on behalf on the wind and solar energy industry’.