The Iran oil crisis has proved Ed Miliband right on green energy. But households still need more help | Mathew Lawrence

"Britain's electricity market uses a marginal pricing system, which means that the price paid for all electricity at any moment is set by the most expensive source needed to meet demand. Even though gas produces only about a quarter of our electricity, it sets the price around 85% of the time. That means even when renewables are generating most of the country's power, your bill doesn't reflect the cost of solar or wind."

"Because gas is a global commodity with the price set by the international market, the closing of the Strait of Hormuz translates into rising electricity bills in Hull even as the horizon grows thick with wind turbines and the share of clean power on the grid grows every year."

"Grid decarbonisation insulates Britain from fluctuations in global gas markets. But if the aim is to protect households and reduce the overall cost of the transition, it isn't enough. The price of electricity turns not just on what technology powers the grid, but on the architecture of the market itself."

Britain's energy system prioritizes profit extraction over security, leaving households vulnerable to fossil fuel price volatility driven by geopolitical disruption. The electricity market uses marginal pricing, where the most expensive source needed to meet demand sets prices for all electricity. Gas produces approximately a quarter of Britain's electricity but determines prices around 85% of the time, meaning renewable generation doesn't reduce bills proportionally. This structure exposes British consumers to international gas market fluctuations regardless of clean energy expansion. The government's strategy focuses on flooding the grid with renewables to break the gas-price link, which has merit for decarbonization and economic justice. However, this approach alone proves insufficient for protecting households and reducing transition costs, necessitating comprehensive market reform.

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