Energy Users Could Save £5bn Annually if Gas Power Plants Are Removed from Market

Published: 04 September 2025 | The English Chronicle Desk

Households and businesses in the United Kingdom could collectively save as much as £5bn every year if gas-fired power stations were removed from the wholesale electricity market, according to a new report that has reignited debate over how energy prices are set. The findings, co-authored by Adam Bell, the government’s former head of strategy at the Department for Energy Security and Net Zero, argue that Britain’s dependence on gas as the marginal price setter is needlessly inflating energy bills at a time when the country is generating more power from cheaper renewable sources.

Although gas accounts for only around a quarter of the UK’s annual electricity consumption, it plays an outsized role in dictating costs due to the structure of the market. Under the current “marginal pricing” system, electricity prices are determined by the most expensive form of generation needed to meet demand, which in Britain is almost always gas. Research shows that gas sets the UK’s wholesale price 98% of the time – far higher than the European Union average of under 40%.

The report, commissioned by Greenpeace and published by consultancy Stonehaven, suggests moving gas plants into a “strategic reserve” instead of allowing them to participate in the competitive wholesale market. This would mean that gas power stations could still be called upon during periods of low wind and solar output, but their higher costs would no longer set the overall price of electricity. The authors estimate that households could save up to £1.7bn annually by 2028, while businesses and industrial users could collectively reduce their bills by around £3.3bn each year.

Bell, now Stonehaven’s policy director, said the move was bold but necessary: “Taking gas out of the power market is a radical step, but these are radical times. The government has very few options to cut bills, and none with as high a return as our proposal.” He added that the system would also provide long-term revenue certainty for plant operators as demand for fossil-fuel generation is phased down during the 2030s.

Supporters of the proposal argue that Britain’s energy system is overdue for reform. Despite rapid growth in renewable energy generation, from offshore wind to solar farms, electricity bills remain closely tied to volatile gas prices. This has helped fuel the wider cost-of-living crisis, placing financial strain on households and raising costs across the economy. High power prices have also complicated government efforts to encourage adoption of electric vehicles and alternatives to gas boilers, both central to the UK’s net-zero strategy.

Greenpeace UK campaigner Angharad Hopkinson welcomed the findings, saying the current system was “rigged in favour of the gas industry.” She added: “Renewable energy, like wind and solar, is cheaper than gas, its prices are far more stable, and we’re producing more and more of it every year in the UK. But because gas is allowed to dictate electricity prices, households and businesses are paying far more than they should, while gas companies reap huge profits. Bringing gas into a strategic reserve would prevent profiteering and deliver immediate financial relief to consumers.”

The government has not committed to the proposal but has reiterated its intention to move towards greater energy independence. A spokesperson said: “Our mission for clean power by 2030 will replace our dependency on unstable fossil fuel markets with clean, homegrown power controlled in Britain, which is the best way to protect billpayers and boost our energy security.”

The debate underscores the wider challenge facing policymakers: how to balance the immediate pressures of high energy costs with the long-term transition to a low-carbon power system. With Britain among the developed economies bearing the heaviest electricity bills, momentum is building for reforms that could reshape the market and redefine the role of gas in the country’s energy future.