Russian invasion anniversary: £140bn gas bill for UK since crisis began
Since 2021, when gas prices started rising ahead of the Russian invasion of Ukraine, the UK has spent an additional £90 billion on gas
By Jess Ralston
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New analysis from the Energy and Climate Intelligence Unit (ECIU) estimates that the UK has spent around £140bn in total on wholesale gas between the start of 2021 and the end of 2024. With pre-crisis wholesale gas costs of £10-15bn per year, this means around an extra £90bn has been spent on gas over the last four years [1]. If this cost were spread amongst the UK’s population, it would equate to around £2,000 per person, which is £1,300 more than it would have been without a gas crisis [2].
The extra cost of wholesale gas would have been even higher were it not for high prices suppressing UK demand by 15% since late 2021, compared to typical levels from before the gas crisis. [3] Wholesale gas prices account for the major part of home gas bills, but have also driven up electricity bills as due the way the market works, gas power stations almost always set the wholesale price of electricity.
Gas prices started to rise in 2021 ahead of the Russian invasion of Ukraine [4], and despite having fallen from the peak of the crisis, a week ago they reached their highest level in two years [5]. This volatility is expected to endure as gas storage facilities across Europe are not filled to their maximum, there is increased competition for liquefied natural gas (LNG) and conflicts in Ukraine and the Middle East continue. There is also uncertainty around the Trump Administration’s actions in the US. This is reflected in the rise in the energy price cap in April.
Jess Ralston, Energy Analyst from the Energy and Climate Intelligence Unit (ECIU) said:
“Families and businesses continue to feel the impact of the volatile gas price in their bills and balance sheets. The Energy Crisis Commission found that the UK remains ‘dangerously unprepared’ for another crisis, and although there’s been some progress on boosting renewable energy so that we don’t need so much gas, programmes to help people insulate their homes to cut energy waste and bills are in the slow lane.
“Price stability and energy independence will come from rolling out renewables to replace gas electricity generation, moving to electric heat pumps and away from gas boilers that will increasingly depend on foreign gas imports as the North Sea’s inevitable decline continues. More drilling in the North Sea won’t make any difference to prices as they are controlled by international markets.”
The North Sea Transition Authority’s projections show that North Sea gas production will continue to decline whether or not new drilling takes place [6], falling by 53% in existing fields by 2030 compared to 51% if all new fields and potential future discoveries came into production. There will be similar differences in production levels in 2050 whether there or is new drilling or not: from 97% down to 95%. This means that unless the UK starts to reduce demand for gas, for example by building out renewables and transitioning away from gas boilers, then imports will only increase.
Household bills are expected to rise slightly during 2025, with forecasts changing often as a result of volatility in the gas markets. The average dual fuel household’s bill in April is expected to be around £1,800, which is almost two-thirds more than pre-crisis levels [7].
In 2022 the International Monetary Fund stated that the UK is the country worst hit by the gas crisis in Western Europe because of our high dependency on gas [8]. The Energy Crisis Commission also found that the UK remains ‘dangerously unprepared’ for another crisis, and recommended that the UK focus on trying to reduce exposure to volatile gas markets by lowering demand for the fuel, for example by building renewables but also by insulating buildings and moving away from gas for heating [9].
Notes to editors:
1. Analysis by the ECIU is based on Government, Ofgem and industry data, using a combination of short-term and longer-term gas prices: DUKES 1.2 and QEP 3.4.1 (excl CCL) by DESNZ; Price Cap model Annex 2, Ark1 Forward Delivery, and Ark1 Day Ahead by Ofgem; and market data for day-ahead, front month, and gas CfDs. Data for gas demand, where required to convert prices into total costs, was taken from ET 4.1 by DESNZ. From each dataset, wholesale gas costs were calculated for each year 2016 to 2024. Costs in the four years 2016 to 2019 were in the range £10-15bn/yr, with average values of c.£13bn/yr used as the pre-crisis average and total costs of c.£50bn over the four years. 2020 was not included in the analysis due to the impacts of the pandemic. Data for the four years 2021 to 2024 showed the costs of gas in the gas crisis thus far. Some datasets extended to the end of 2024, whilst others extended to Q3 2024 and were extrapolated. We will probably never know the precise extra cost of gas during the crisis: energy companies’ hedging strategies are commercially sensitive and private, but their effects can be estimated during normal times, whereas these estimates are less reliable during times of increased volatility as seen over the past four years. Prices that vary more rapidly in response to supply and demand suggest total costs of c.£150bn over 4yrs, which is c.£100bn extra due to the gas crisis. Prices that respond less rapidly (e.g. price cap wholesale price assumptions) suggest total costs of c.£130bn over 4yrs, which is c.£80bn extra due to the gas crisis. Central values are c.£140bn in total costs, and c.£90bn in extra costs. Government data for wholesale costs (line 9 in DUKES 1.2) currently goes up to the end of 2023, showing extra costs of £80bn for the first 3years of the gas crisis; once data is available for the whole of 2024, it is likely to give a value of around £90bn for 4years, and potentially as high as £100bn.
2.Wholesale gas costs are spread between all types of bills, including industry and business, so this figure is purely illustrative.
3. Gas demand data from ET 4.1 by DESNZ shows that UK gas demand was 10% below the pre-crisis average in 2022, and 20% below that average in 2023. Cumulative gas demand since Q4 2021 to Q3 2024 was around 15% below pre-crisis levels.
4. Gas prices started rising in 2021: https://tradingeconomics.com/commodity/uk-natural-gas
5. Gas prices recently hit a two-year high: https://eciu.net/media/press-releases/2025/gas-prices-reach-two-year-high-in-run-up-to-anniversary-of-ukraine-invasion
6. North Sea Transition Authority: Production and expenditure projections, October 2024
7. Household bills are predicted to rise slightly in 2025 to around £1,800, with the pre-crisis average home’s dual fuel bill taken to be £1,100: https://www.moneysavingexpert.com/utilities/energy-price-cap-prediction/ and https://energyguide.org.uk/history-of-ofgems-energy-price-cap/
8. IMF, The Guardian, 2022
9. Energy Crisis Commission, 2024
For more information or for interview requests:
George Smeeton, Head of Communications, ECIU, Tel: 07894 571 153, email: george.smeeton@eciu.net