What actually appears on a bill?
Ofgem groups domestic tariff costs into wholesale energy, gas and electricity networks, operating and industry costs, policy programmes, supplier earnings and VAT. Both the unit rate and the standing charge affect the amount a household pays. The mix changes by period, meter type and payment method. A figure for one quarter must not be treated as a permanent share of the bill.
Ofgem reported in April 2026 that wholesale energy represented around 40% of a typical energy bill. This is a combined energy-bill discussion, not evidence that 40% of every electricity bill is wholesale gas. The price cap limits rates for default domestic tariffs; it is not a fixed maximum annual bill.
Why does gas affect the electricity price?
Great Britain uses a wholesale market in which marginal generation often sets the price for a trading period. When a gas-fired power station is the marginal generator, the fuel and carbon costs of gas can influence the wholesale electricity price paid across that period. A household does not necessarily buy a specific physical unit of gas-generated electricity, but the trading market still influences what suppliers pay.
Renewables with low operating costs can reduce fuel demand and wholesale prices in some hours. The eventual bill effect also depends on contracts, networks, balancing, taxes and how savings are passed through. That is why “wind is cheap” and “bills are expensive” are not mutually exclusive statements.
Generation cost versus system cost
A wind turbine, solar farm, nuclear station or gas plant can be compared on levelised cost of electricity, but that measure usually does not include all the costs of making the entire system reliable hour by hour. Whole-system evaluation also considers transmission, backup, reserves, storage duration, curtailment and maintaining reliable operation during extreme weather.
These costs do not all belong exclusively to wind or solar. Any system needs networks and some reserve; gas-only systems face fuel-price shocks and emissions costs. To compare strategies fairly, use the same demand, reliability standard, financing rates, project dates and carbon assumptions.
Questions to ask about any claim of cheaper bills
Is the figure for wholesale electricity, the whole power system or a household bill? Are network and policy costs included? Is it in current pounds or inflation-adjusted prices? Does it assume a fixed gas price? Finally, is the number a modelled scenario or an observed outcome?
Our analysis will show source tables and alternative assumptions wherever possible. It should not infer a precise future household saving from generation cost alone.
Sources and further reading
- Ofgem — How your energy bill is calculated
- Ofgem — Wholesale energy costs and your bills (2026)
- NESO — Clean Power 2030 advice and technical annexes
Reader appreciation — not a vote on the evidence.