NEWS UPDATE ENERGY COSTS


£9.8bn added to UK energy costs as conflict drags on


Commenting on the analysis, Jess


Ralston, head of energy at ECIU, says: “Yet again, events thousands of miles away are having a direct impact on the cost of living in the UK because of slow progress on electrification and so ongoing dependence on oil and gas which is priced by international markets.” Analysts at Cornwall Insight have


Conservatives clash on climate change


A Financial Times column on 2nd September, written by Conservative grandee John Gummer (Lord Deben) entitled ‘Tory attempts to repeal the UK Climate Act are tin-eared’, has revealed a big split within the Party over acknowledging the seriousness of climate change. That same day, on the official agenda of the House of Commons was the launch of the Climate Change Act 2008 Repeal Bill which proposes abolishing the Climate Change Committee, five-year carbon budgets and removing any hint of any net zero target. Such attempts have been


made before. In the last Session, eccentric Conservative backbencher Sir Chris Chope tried tabling a similarly named Bill, which disappeared unnoticed. But this time, new legislation was being promoted by Andrew Bowie MP, who just two days before had been promoted by Conservative leader Kemi Badenoch to be her shadow secretary of state for energy and net zero. However, Lord Deben’s


unprecedented intervention – describing Bowie’s Bill as a “stunt” – had an immediate effect. Just before the official time to introduce the new Bill, its sponsor was officially claimed to be Bradley Thomas, a new MP from Bromsgrove, who happens to have worked in advising the oil industry before being elected. Thomas eschewed the chance


to spend any of his permitted ten minutes explaining to fellow MPs the Bill’s objectives. Instead, he simply asked for it to be printed as Bill Number 138, and next considered as long ahead as 26 February 2027.


06


New analysis from the Energy and Climate Intelligence Unit (ECIU) finds that higher wholesale oil and gas prices since the start of the US-Iran war, on 28th February, will add an estimated £9.8bn to UK energy and road transport costs. This includes over £5bn in higher gas and electricity costs that are expected to feed fully through into bills next year, alongside around £4.7bn in additional road fuel costs


already being paid by motorists. The analysis shows that, for every


week the conflict continues, UK gas and electricity users are likely to face a further £190m in excess costs on energy bills, with the full effects being felt next year as wholesale gas prices feed through into contracted energy rates. This comes on top of around £183m per week in additional road fuel costs already being seen at the pump.


recently said that energy bills are currently forecast to rise a further 9% in the new year, putting an average January bill up to £1,872 a year. This is due to gas price spikes over recent weeks combined with factors including the summer heatwave across Europe. The increase in wholesale gas


prices is projected to add over £160 to the average household dual-fuel energy bill next year if prices remain high. Even after the conflict ends, gas prices are expected to remain high, for example from infrastructure damage to the Ras Laffan gas site which may have mid-term impacts on liquefied natural gas (LNG) markets. British industry and the commercial


and public sectors are also seeing higher costs, with an extra £100m per week in gas and electricity bills expected to filter through next year and an extra £100m per week in road fuel costs already being spent.


New funding model proposed to expand heat networks


Heat networks could attract £17bn of investment by 2035 if the government provides £1bn of funding now and introduces a new financing model, according to an industry report. Heat networks currently provide about 3% of the UK’s heating, but government plans aim to increase this to 20% over the next 25 years, with the potential for a much higher share in some towns and cities. The report, published by Energy UK and the Heat Networks Industry Council, says £1bn of public investment could support a further £4bn from private investors by the end of the decade. It proposes introducing a


Regulated Asset Base (RAB) model from 2030. The approach, which is used to finance major infrastructure projects, would provide investors with greater certainty over future revenues. The organisations behind the


report say this could help heat networks compete more closely with gas heating by reducing the cost of projects and, potentially, prices for customers. They estimate investment in the sector


could reach £17bn by 2035 and £100bn by 2050 if the proposed approach is adopted. Adam Berman, director of


policy and advocacy at Energy UK, comments: “Heat networks are an essential piece of the puzzle in a cleaner, more secure energy system. By supporting this sector to crowd in private investment in the coming years, and providing confidence and financial certainty beyond 2030, they can drive economic growth, support


tens of thousands of skilled jobs across the UK and strengthen our energy security.” The report comes as the


government considers how heat networks could contribute to reducing emissions from heating buildings. Unlike individual heating systems, heat networks supply multiple properties from a shared source, which can include recovered heat and other low- carbon sources.


EIBI | SEPTEMBER 2026


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