Why is the cost of energy so high? And other commonly asked questions

Why is the cost of energy so high? And other commonly asked questions

By: Shell Energy

18 May 2022

With so much happening in the energy market right now, our customers are understandably keen to know more. We want you to feel informed and supported all the way, so here are answers to the questions you’ve been asking us lately.

Why is the cost of energy so high?

Rising energy prices have hit households across the UK, Shell Energy customers included. There are a number of reasons wholesale energy prices have increased around the world. These include high demand in Asia, and the ongoing situation in Ukraine.

I've heard wholesale prices are coming down. Why isn't this reflected in my bill?

Wholesale prices have decreased but are still a lot higher overall. In fact, they’re around four times what they were in late 2021.

It takes a while for changes in wholesale prices reach energy customers because suppliers buy energy ahead of time. So your bill from spring will be for energy bought the winter before, when prices were higher.

Additionally, gas storage in Europe works on supply and demand, with demand naturally higher during winter months. The wholesale price rises with the demand.

If all Shell Energy’s electricity is renewable, why have my prices gone up?

Here at Shell Energy, all our electricity is 100% renewable as standard.

To ensure this, we buy Renewable Energy Certificates of Origin. These guarantee that, for every unit of electricity you use, we match it with a unit of renewable electricity put into the grid. This renewable electricity comes from generators that produce energy using sources like wind, solar and biomass.

Like all energy suppliers, we rely on the National Grid to transport electricity into your home. The grid mixes energy from renewable and non-renewable sources. When demand for renewables is greater than supply, the grid tops up using other, non-renewable sources.

At the moment, around 40% of the UK’s electricity comes from renewable sources, leaving the rest to come from other sources, such as nuclear power, or burning fossil fuels. When prices for non-renewable electricity rises, it means that the price of wholesale electricity increases across the board.

This is why it’s so important that the UK generates more electricity from renewable sources. That way our electricity will be less vulnerable to changing gas prices.

What can be done about rising energy costs?

We want to support you as much as we can to use less energy. That’s why you’ll find plenty of energy-saving advice on our website and blog. We’re also committed to helping those less able to pay, so we’ve created a support hub, where you’ll find details of the help we can offer.

The rise in energy prices shows how important it is that we change the way Britain’s homes are heated and powered, and transition to net-zero carbon dioxide emissions. As we move towards low-carbon heating solutions in UK homes and generate more electricity from renewable sources, the UK will become less reliant on gas and less vulnerable to changing gas prices.

Learn more about how we’re powering progress to net-zero.

How can I lower my energy bills?

Here are some ways you can save money on your energy bills:

Pay by Direct Debit

Having a Direct Debit in place will save you money, as well as helping you spread the cost of your energy.

If you’re on a fixed tariff and pay by Direct Debit, you can save an average of £201* per year.

Get a smart meter

If you haven’t already done so, have a smart meter installed. Smart meters let you see your energy use in pounds and pence, helping you to make smarter, energy-conscious decisions. This stops you wasting energy, which will lower your bills and your carbon emissions, too.

Having a smart meter means no more estimated readings – you’ll be billed for exactly how much energy you used during the billing period.

Send regular meter readings

If you don’t have a smart meter, you’ll need to send us monthly meter readings via your online account, or the Shell Energy app. That way you’ll receive accurate bills, and only pay for the energy you use.

Take control of your energy use
We want to help our customers use less energy. That’s why you’ll find plenty of energy-saving advice on our website and blog.

I can’t afford my energy bill, what should I do?

We’re committed to giving our customers a helping hand when they need it most. If you’re struggling to pay your energy bill, please visit our support hub, where you’ll find details of what solutions we can offer.

The most important step you can take is to get in touch with our dedicated team. Once you’ve explained your circumstances, we can talk you through the ways we can help.

Find the most convenient way to contact us.

*Savings will vary as rates are applied against standing charges and unit rates.