Heightened demand across Europe almost caused the outage, forcing the Electricity System Operator (ESO) to purchase emergency electricity from Belgium. This was paid for at a significantly inflated price. At its most, 5,000% over the usual rate, costing £9,724 per megawatt hour. This is the highest rate that the UK has paid. 

It’s important to note that the amount of electricity purchased at this record rate was minimal, being just enough to power eight homes for a year. However, it highlights the UK’s reliance on other nations for power, and the cost it can come at.

“We were bidding in a tight market and market prices were high that day because Europe also wanted the energy,” said a spokesperson for the National Grid ESO

“We managed the system and kept the electricity flowing to the South East.”

As well as the freakish heat, storms in Europe, as well as maintenance and outages of electrical infrastructure in the UK cause further supply issues, resulting in the last-minute power grab. The high price paid is likely to trickle down to energy customers as suppliers look to pass on costs. 

Unfortunately for households, this is the last of their concerns when it comes to energy bills. April’s record-breaking price cap increase saw gas and electricity costs rise by 54%, which was a record at the time. While there had been hopes the turmoil in the market would slow down, Russia’s invasion of Ukraine at the start of the year means that come October, another hike is almost certain. Current predictions for the Autumn price cap adjustment sit at £3,200, courtesy of industry experts Cornwall Insights. If Russia continues shutting off power supplies to Europe, this could rise as high as £3,850 at the start of next year.

While the government has laid out a series of financial support measures, it will not cover the next expected increase in energy bills. A recent report from the business and energy select committee warned that millions are being pushed into fuel poverty this winter. Among other suggestions, they urged the government to introduce a lower price cap threshold for vulnerable households.

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According to the business and energy select committee, millions risk being forced into ‘unimaginable debt’. The statement comes just weeks after predictions for October's price cap increase rose to £3,244.

The report highlighted that the government's £15bn package was made when the price cap was only projected to hit £2,800. With a higher rate almost certain, the committee insists that additional support be made available. 

One of the suggestions included was the introduction of a “social tariff” for vulnerable households. This would in effect create a separate, lower price cap for certain low-income customers. 

“Once again, the energy crisis is racing ahead of the government,” said Committee Chair and Labour MP, Darren Jones. “We were told by a number of witnesses, ‘If you think things are bad now, you’ve not seen anything yet.

“To prevent millions from dropping into unmanageable debt it's imperative that the support package is updated and implemented before October, when the squeeze will become a full-on throttling of household finances and further tip the economy towards recession."

Since late 2020, global energy prices have been climbing. Initially, this was due to increased demand in Asia and muted output in Europe. The UK suffered worse than most, in part because of its low storage capacity, which made it highly vulnerable to unfavourable market conditions. As the price cap prevented suppliers from passing costs onto consumers, many energy companies found themselves operating at significant losses. This led to 29 suppliers going under in 2021 alone. 

Ofgem was heavily criticised as a result. Many believed that the regulator allowed too many unsuitable entrants to the market in the name of increasing competition. The result was a catalogue of failed energy suppliers, which have created a multi-billion pound price tag for the taxpayer.

These perceived failings were included in the committee’s report, which said that: “Ofgem’s incompetence over many years enabled inadequately resourced and inexperienced founders to start energy companies.

“It failed to supervise regulated companies, which in turn took high-risk decisions including not hedging properly and using customers’ money to offer unsustainable prices that undercut well-run energy companies.” 

As well as trying to reduce bills in the short term, the report also stressed the need for long-term investment to improve the UK’s energy efficiency. One area requiring immediate attention was a nationwide insulation programme. 

Earlier this year, the UK was revealed to have the worst insulated homes in all of Europe. Improving this is therefore viewed both as a route to cheaper household bills but also a way of achieving the UK’s net-zero aspirations.

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Lloyds chief executive Charlie Nunn said around a fifth of the bank’s 26 million customers had “significantly” altered their spending in response to rising prices. That included putting off purchases of white goods and computers and cancelling entertainment subscriptions.

Since the summer of 2021, Lloyds customers cancelled or blocked 2.2 million subscription services such as Netflix. The rash of cancellations reflects the thawing of pandemic restrictions, which has reopened entertainment opportunities beyond streaming but also reflects strained finances that are barely covering the basics.

Families are spending an average of £89 per month more on those basics - energy, food, and fuel - than before the pandemic, Lloyds said. 

Gas and electricity bills currently stand at just £2,000/year for the typical household, and recent forecasts suggest they could climb to a staggering £3,850 in January. Meanwhile, inflation stood at 9.4% in June, driven by rising food prices.

The pressures have left around 1% of Lloyds customers “really struggling to make ends meet,” Nunn said.

Against that background, Lloyds' economic outlook was cautious. Its pre-tax profits in the second quarter stood at £2 billion, exceeding analyst projections of £1.6 billion and largely in line with the same period in 2021.

The banking group benefited from a rise in interest rates following the base rate hike, bringing in more income from mortgages and loans. 

Trying to curb inflation, the Bank of England has raised the base rate five times since December, taking it to 1.25%. Lloyds anticipates that the base rate will peak at 2.25%.

However, Lloyds' rising income from loans was offset by the £200 million it set aside to cover potential defaults should rising prices make it harder for homeowners to keep up with mortgage and loan payments.

Nunn said hundreds of Lloyds staff members are being trained to help struggling customers manage their finances. He said the customers in the worst financial positions wouldn’t have borrowed from the bank so wouldn’t be at risk of default, and the number of customers currently in arrears remains at “low levels.”

But the country’s largest mortgage lender is anticipating that the cost of living crisis will slow mortgage lending and house price growth in the coming months.

Meanwhile, Lloyds announced this week that it will shutter 66 Lloyds and Halifax branches from the autumn, meaning it will have axed more than 200 branches since the start of 2022.

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The energy consultancy firm had recently projected that bills would rise to £3,000 in the Autumn. However, a new prediction made on the 8th of July puts the final figure at £3,244. Unfortunately, April 2023’s adjustment does not appear to hold any respite either, with a slight increase to £3,363 forecast. While Cornwall Insights conceded that much could change in the coming months, some price hikes appear inevitable.

"There is always some hope that the market will stabilise and retreat in time for the setting of the January cap,” said Dr Craig Lowrey, a principal consultant at Cornwall Insight.

"However, with the announcement of the October cap only a month away, the high wholesale prices are already being “baked in” to the figure, with little hope of relief from the predicted high energy bills."

“As the energy market continues to grapple with global political and economic uncertainty, the corresponding high wholesale prices, and the UK’s continued reliance on energy imports has once again seen predictions for the domestic consumer default tariff cap to rise to what are even more unaffordable levels.”

Energy prices started rising significantly towards the back end of 2020. This predominantly due to muted wind output in Europe and several Asian nations' increased demand as they came out of lockdown. The issue in the UK was exacerbated by poor domestic output coupled with low storage capacity, meaning that Britain was especially vulnerable to the increasingly hostile market conditions.

As wholesale prices rose, numerous energy companies, unable to pass costs onto customers due to the price cap, began to go under. 2021 alone claimed nearly 30 casualties. The largest of these was Bulb, which, due to its size, was placed into special administration by the government.

However, when April hit, Ofgem increased the price cap by 54%. This means that the average UK household is paying nearly £2,000 a year for their gas and electricity. Unfortunately for Brits, the hike in bills isn’t the only thing costing them more, as petrol, groceries and rental prices all climb.

To mitigate this, the government recently announced a range of emergency measures. These come into effect this weak and include one-off payments of £650 to all domestic energy customers, as well as additional support to lower-income and vulnerable households.

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In a world-first, researchers from Finland recently developed a sand battery prototype which can efficiently store heat for months. It uses cheap renewable energy to charge the battery, bringing tonnes of low-grade sand to around 500C. This in turn generates warm air, which is used to heat buildings.

While the issue of cheap, renewable energy has been growing for a while, its importance has grown in the past couple of years. Increased climate change concerns, combined with the rising cost of natural gas has governments scrambling to find solutions. The issue has become more acute since Russia invaded Ukraine. As Russia provides a large amount of Europe’s energy, fears of supply chain disruption and threats from the Kremlin to limit output have caused significant price fluctuations.

Finland is especially vulnerable to these risks. Not only because it sources the majority of its energy from Russia, but also because of the energy-intensive nature of its long and cold winters. It’s perhaps unsurprising then that Finnish engineers have potentially come up with a solution. 

Speaking to the Mail Online, co-founder of Polar Night Energy Marku Ylonen said: "The transition to green energy leads to huge variation in available electricity, leading to mismatch in production and consumption.

"The mismatch can at times be large; we might have tens of GW’s worth of non-usable electricity. 

"Our heat battery can provide a low-cost sink for huge amounts of energy, stored as heat at high temperature, and it can maintain it in useful form for industry, district heating, or later also for electricity generation. 

"The key benefit is really the scale we can offer for storage, we can store tens of GWh’s worth of energy with reasonable costs and without significant degradation of the system over time."

With energy costs on the rise, these sorts of innovations cannot come soon enough. April saw a 54% increase in the price cap - the figure set by Ofgem which limits how much energy suppliers can charge customers. This means that households are paying nearly £2000 per year for gas and electricity. There are further concerns that the next price cap adjustment in October could bring bills as high as £3000.

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The innovative scheme hopes to create a generation of households that are not reliant on fossil fuels. This is achieved through the installation of solar panels, air pumps and battery storage during the building process. 

While it will make the properties around £8,000 more expensive, they are completely self-sufficient and therefore without energy bills. At current prices, this would represent a return on investment within around four to five years.  

Two factory-built homes will be erected in Essex as the first part of the trial. Should it be successful, Ilke has said that they hope to have 10,000 of these properties built by 2030.

Ilke Homes CEO Giles Carter, said: “Our strategic partnership with Octopus Energy Group is the next milestone on our Ilke ZERO journey. 

“The premise of this partnership is to both empower consumers, who are faced with one of the worst cost-of-living crises in decades, and demonstrate that net-zero and construction can work hand in hand.

“Thanks to years of intensive research and development, we have successfully created a ready-to-go, highly energy-efficient solution to housing delivery — one which will help investors future-proof investments against government policy, help meet strict ESG criteria, and allow for revenue streams to be accessed as quick as possible due to a significant reduction in construction programmes.”    

Creating sustainable, self-sufficient homes could help the UK to achieve two of its most pressing goals. The first of these is its ambitious net-zero aspirations, set out ahead of COP26. Second, is the growing urge to bring down household energy bills, which are the driving force behind the current cost of living crisis. 

“This breakthrough partnership debunks a long-standing myth — that cleaner energy will mean higher bills for consumers; instead, people living in these homes won’t be paying for energy at all,” said Octopus CEO, Greg Jackson.       

“This is yet another demonstration that clean energy is cheap energy, and the best answer to the fossil fuel crisis is accelerating the transition to renewables.” 

From April the 1st, the energy price cap - a figure which dictates how much suppliers can charge customers - was increased by 54%. The new rate means that households are paying an average of nearly £2,000 per year for their energy bills. There had been hopes that this would drop when the cap is next reviewed in October. 

However, Russia’s invasion of Ukraine and the subsequent market turmoil it caused ended this possibility. Current estimations for the next adjustment sit at £2,800.

While Octopus and Ilke’s zero bills homes are unlikely to have a positive impact in the short term, a successful rollout could be vital in ensuring that households are shielded from future price fluctuations.

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Government ministers are holding talks with Centrica – the parent company of British Gas – about reopening the Rough storage facility just off the coast of Yorkshire. The huge gas storage facility was shut down in 2017 after government subsidies were put on hold, but it still has the potential to store up to nine days’ worth of the UK’s gas demands.

The talks are part of contingency plans that are currently being drawn up by the government in response to the ongoing global energy crisis. It is hoped that by reopening the storage facility, the country as well as the rest of Europe will be less reliant on Russian gas imports this coming winter and this would help to prevent any possible power outages.

These talks represent a dramatic U-turn for the government, who have previously claimed that there was no longer any use for the facility as the UK aims to achieve net zero in the coming years. However, the ongoing war in Ukraine has increased the risk of shortages and power cuts, and the government now believe they need a backup plan.

The government has also claimed that the facility could be adapted to be more sustainable in the future, for example being repurposed as a hydrogen storage facility.

A government source told inews: “There is ironically a glut of gas in the UK so it might now be a good idea for us to be able to store it.  At the moment all we can do is export it to the continent straight away. We are effectively being used as a front door to Europe for US and Qatari gas, there is an armada of tankers trying to get in.”

These new plans come just days after it was announced by energy supplier EDF that it was already too late to not shutdown the Hinkley Point B nuclear power plant by the end of July. The government had hoped to delay the closure of this controversial power station to help get the UK through the winter.

However, despite this setback, the government is still confident that there won’t be any blackouts whatsoever in the UK over the coming months. A spokesperson for No 10 said: “I think you would expect Government to look at a range of scenarios to ensure plans are robust, no matter how unlikely they are to pass. Neither the Government or National Grid expect power cuts this winter.”

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Under proposed changes, the price cap - the mechanism limiting how much suppliers can charge customers - would be adjusted every three months. Currently this is done bi-anuually, once in October and once in April.

Ofgem’s  announcement represents the latest in a long list of discussions regarding the price cap. The fact that changes are relatively infrequent has been hailed as both a good and bad thing. 

When the wholesale cost of energy began its ascendency towards the end of 2020, the cap prevented this being passed onto customers. At the same time, it meant that providers were operating at significant losses. 

Since the start of 2021, 29 energy companies  have gone under. The largest of these was Bulb, which, with 1.5 million customers, was viewed as too large to fail, and was subsequently placed into administration by the government.

Increasing the rate of price cap adjustments would be a fairer reflection of market conditions, according to Ofgem.  

“A more frequent price cap would reflect the most up-to -date and accurate energy prices and mean when prices fall from the current record highs, customers would see the benefit much sooner,” said Ofgem Chief Executive Jonathan Brearley.

“This change would also help energy suppliers more accurately predict how much energy they need to purchase for their customers, reducing the risk of further supplier failures which ultimately push up costs for consumers.

“The last year has shown that we need to make changes to the price cap so that suppliers are better able to manage risks in these unprecedented market conditions.”

It’s not immediately clear whether quarterly adjustments would be in favour of the consumer or energy providers. However, some charities believe that it could be harmful due to uncertainty in the market. 

Speaking on the subject, Gillian Cooper, Head of Energy Policy at Citizens Advice, said: “We know many energy customers will be worried about seeing prices change more frequently, rather than being locked in for six months.

“These measures should reduce the risk of further supplier failures which have already left customers with a multi-billion pound bill.

"But they underline the need for a clear plan on how to protect families from further price hikes and support those struggling now."

While there had been hopes that the market would stabilise following a deeply volatile few years, Russia’s invasion of Ukraine has kept prices high. This turmoil, among other global factors, has given rise to predictions of an additional 32% increase in October. The result would be average energy bills of £2,600 per household, almost double what they were at the end of 2021. 

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Concerns were initially raised on the 14th of April by Ofgem’s chief executive Jonathon Brearley. In a blog post, he wrote he was seeing ‘troubling ‘signs that suppliers were hiking prices more than they should to prop up their finances. Similarly, he cautioned that some may be guiding customers to more expensive tariffs.

This followed the raising of the energy price cap on April 1st by a record-breaking 54%, resulting in the average Uk household paying £700 extra per year for energy. Naturally, this meant many customers needed to increase their direct debits to accommodate the adjustment. 

However, some suppliers have been perceived to be overstepping their boundaries. As a result, Ofgem is launching “market compliance reviews” to ensure that among other things, direct debits are not being unfairly increased.

Throwing his hat in the ring, Kwarteng announced on Tuesday, that if providers could not demonstrate that direct debit hikes were proportionate within three weeks, they could face ramifications.

“Some energy suppliers have been increasing direct debits beyond what is required,” he said.

“I can confirm Ofgem has today issued compliance reviews. Suppliers have three weeks to respond. The regulator will not hesitate to swiftly enforce compliance, including issuing substantial fines.”

Speaking with the BBC shortly after Kwarteng’s announcement, a spokesperson for Energy UK -  a trade association representing numerous energy suppliers - said: “Suppliers are required to set [direct debits] at a fair and reasonable level based on the customer’s individual circumstances, taking into account factors like previous energy use or record with previous payments.

“It is right that the regulator is looking to ensure that suppliers are complying with those requirements. Customers who do have concerns with the level of their direct debit payments should contact their supplier.”

As well as high energy bills, Brits are facing rising costs in a variety of areas. Supermarket goods, fuel, and rent are also getting more expensive, contributing to the current cost of living crisis. 

While some government support has been offered, many are suggesting that a windfall tax be levied against companies like Shell, who have benefited greatly from the rising wholesale prices of natural gas and oil. This would then be used to alleviate some of the strain that households are facing by mitigating energy bills. 

However, the government has so far rejected these calls. In an interview with Times Radio on Tuesday, Johnson said: “If you start whacking huge taxes on business, in the end you deter investment and you slow down growth.

“If BP wants to pay a windfall tax then that’s another matter but the clear advice we have is that we need those big companies to invest."

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This is according to energy consultancy Cornwall Insights, who have warned that we could be seeing a further £600 average annual increase when the price cap is adjusted in October. While a lot can change in four months, they believe higher bills are almost inevitable given the current market conditions.

Dr. Craig Lowrey, Principal Consultant at Cornwall Insight said: “The price cap being brought in today is a significant increase from 2021, if Cornwall Insight’s predictions for the Winter 2022-23 cap are realised, households will be set for yet another significant hit to their finances in October.

"While the government’s £350 worth of support will provide some respite to consumers this time around – all-be-it not far enough – with the cap almost guaranteed to rise again, the government will need to look at expanding the scale and scope of this support after October at the very least.”

Responding to the news, Utilita boss Bill Bullen similarly urged that further support for low-income households would be imperative.

"We are going to see an extra £500 or £600 added to bills in October, and frankly the chancellor's going to have to fund that entirely for low-income households," he told the BBC.

"He won't be able to afford to take this problem away for everybody... but for customers who can't respond to that price [increase], that's where the help needs to be targeted."

The news will be ill-timed for many households, as April 1st saw Ofgem increase the price cap by nearly £700 per year. It was a record-breaking hike, made in response to unprecedented wholesale energy costs. 

While energy bills are causing the biggest squeeze on finances, it is not the only factor. Brits are finding that they are paying more across the board, including in shops, at the pump, and for property rentals. All of this is contributing to the much-discussed cost of living crisis. 

Under pressure to respond to these concerns, Rishi Sunak recently announced a new set of fiscal policies as part of his ‘mini budget’. They included:

• A higher National Insurance threshold 

• Removal of fuel-duty 

• Removal of VAT on materials to improve a household's sustainability. 

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