Making Money Why is UK Electricity So Expensive Compared to Other Countries?
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May 11, 2026 Neil Kenward, Interim Director General of Markets at Ofgem, explains how Ofgem sets the price cap and regulates networks and suppliers. He unpacks why many suppliers failed in 2021–22 and how gas often sets electricity prices. He compares UK costs with other countries and explores market design, renewables, storage and whether bills might fall.
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Regulation Focuses On Networks Not Upstream Production
- Ofgem regulates networks tightly but retail and generation are competitive; vertical integration helps firms manage risk.
- Kenward says retail profit allowance in the cap is modest (~2.5%), keeping incentives for competition and innovation.
Understand Standing Charges Before You Complain
- Standing charges cover supplier fixed costs like metering and call centres; Ofgem is piloting lower standing charge tariffs.
- Neil Kenward warns reducing standing charges raises unit rates, so pilots will test customer uptake.
Batteries Solve Short Gaps But Not Multi-Day Shortfalls
- Battery storage costs plunged, enabling many battery projects that smooth short-term variability.
- Kenward cautions batteries suit ~4–8 hour gaps; multi-day or week-long storage remains challenging.