The price of electricity UK could rise by a third by 2025. This is attributed to the increasing cost of wholesale prices and green subsidies.

Wholesale costs are estimated to increase by 30%

Green policy costs set to account for over a quarter of electricity bills

Payments to low carbon technologies are predicted to double by 2025 to £15 billion per year

Smarter Business Head of Compliance Tim Sealy-Fisher says: "Already, medium-term gas prices (which contribute to nearly 50% of the power generation mix) have seen a surge of late due to continued civil unrest in the Middle East; and Brent Crude Oil prices (to which the UK long-term gas price is indexed) have seen a steady resurgence since the 10-year low in January 2016. Prices are likely to continue on this path with the lead up to the proposed public listing of oil giant Saudi Aramco in late 2018."

Although the price of electricity UK has risen by an average of 2% annually, a recent report by Aurora Energy Research predicts that prices will be 33% higher by 2025.

What are the green subsidies for?

The government’s green subsidies are designed to help the UK transition from using polluting fossil fuels to cleaner, more sustainable energy. In the long term, this should actually cause a decrease in the price of electricity UK. Moving towards using these more sustainable energy options will also protect businesses from fluctuations in fossil fuel accessibility and pricing.

In the meantime, however, the investment into these technologies needs to be paid for. This means a rise in the price of electricity UK.

Two of the ‘big six’ energy providers recently announced price hikes

Recent energy price hikes were announced by two of the ‘big six’ energy suppliers:

British Gas prices will go up by 5.5% from 29 May

EDF priced will go up by 1.4% from 7 June

The remaining large suppliers are expected to follow suit.

What about the government price cap?

Although the government recently announced a price cap to protect energy consumers, Ofgem has been forced by increase the cap by £57. This is due to the increasing cost of producing energy.

The cap applies to consumers paying their supplier’s standard variable tariff (SVT). It’s expected to come into play at some point in 2018. Under the price cap model, Ofgem will have to allow for repeated increases in energy prices.