International energy prices: comment

"The UK's domestic electricity prices are fundamentally linked to gas prices which in turn are set by international markets, and gas power plants set the price for electricity generation the vast majority of the time. This mirrors the situation in other economies, such as Italy, where bills are similarly volatile. And what impacts domestic bills affects industry too, with the crisis causing an estimated £29 billion surge in industrial energy bills, with the price of gas the key driver. This includes a tripling of costs for the steel industry, despite production falling by a quarter. [2] 
 
“Investing in the transition to renewables is set to pay back in reducing the risk of price volatility. The government's industrial strategy includes measures to reduce policy and network costs, which should improve system efficiency and lower costs for businesses over time. However, concerns remain about the narrow eligibility criteria for current support schemes and the number of businesses that fall through the gap.
 
“The UK’s reliance on gas imports will inevitably increase as North Sea reserves decline. In contrast, homegrown renewables offer a path to greater energy independence and price stability. Lowering our gas dependency is therefore a critical step to shielding households and industry from future energy crises."

Dhara Vyas, chief executive of industry body Energy UK has said that it is “crystal clear what has driven electricity bills up in the UK…it’s the wholesale costs, driven by the price of gas” [3].UK Steel found in a recent report that "The main driver of the price disparity [between UK steelmakers and their European competitors] is now wholesale electricity costs, driven by the UK’s reliance on natural gas power generation." [4]