Wholesale Energy Prices For Electricity & Gas (2024)

Last updated: May 2, 2024

Are you curious to know what the wholesale energy prices actually are and how much your energy supplier is buying your gas and electricity for?

The wholesale price of energy is the price energy suppliers buy their energy at before they sell it to domestic and business customers throughout the UK.

Like any other business, there are a number of other costs added into the final price that’s offered to you via your particular energy tariff e.g. distribution costs.

So how much do energy companies actually pay for their wholesale energy?

Wholesale Prices of Gas & Electricity UK

Like any company, energy providers try to sell their final product at a profit and in the context of domestic energy, the final price you receive includes their expenses, plus a profit.

The majority of UK energy suppliers purchase wholesale energy well in advance, which is termed hedging.

Hedging enables energy companies to plan their cash flow and other business forecasting projects well in advance.

It also allows some protection for the companies since it guards them from rapid surges in wholesale prices that could potentially bankrupt them.

A lack of hedging and stockpiling energy is one of the key reasons behind the collapse of several energy suppliers back in 2021 and into 2022.

How does a lack of hedging lead to energy companies collapsing?

If the energy supplier fails to plan ahead and buy in advance, it means they have no choice but buy electricity for a higher price than they’d agreed to sell it back to the customer.

See also  Are Smart Meters Accurate? Or Not?

Remember, the Energy Price Cap prevents energy suppliers selling their energy beyond a certain price.

So, say they have to buy their energy at £4.00, yet a new price cap is set by Ofgem at £0.28, they are going to end up losing money.

That business model is doomed to failure in any industry, never mind the energy sector.

Indicative Average Wholesale Price (Last 2 Years)

Energy Costs Breakdown UK

You’re now aware of wholesale energy costs i.e. the cost the energy supplier buys the energy for, but what about the other costs that are added before the final unit cost reaches you the customer?

A typical electricity bill breaks down as the following:

Energy Costs Breakdown%CostUnit Cost
Wholesale cost32%£1524.9 p/kWh
Operational cost16%£762.5 p/kWh
Environmental and social policy costs20%£953.1 p/kWh
Network costs27%£1294.1 p/kWh
VAT5%£240.8 p/kWh
Total£47615.4 p/kWh

Where Can You Access & View Wholesale Energy Data Yourself?

Unfortunately, the whole energy pricing data isn’t freely available, or is it easy to access.

However, if you are interested in keeping a close eye on wholesale energy prices, then you can purchase the data directly from energy suppliers OR use a data provider.

The two main energy data suppliers that also provide access to wholesale energy price data are Epex and Nordool.