Why is the UK dealing with an energy crisis and some countries have low energy bills?

Due to the ongoing energy crisis, consumers in the UK have been seeing frequent increases to their energy bills. In April, the UK faced an unprecedented rise in energy bills after the price cap, regulated by Ofgem, increased by 54%. The change pushed thousands of households around the country into fuel poverty, making it difficult for them to pay for basic necessities such as food or medicines after paying for their supply.  

Still, it is expected that the energy price cap will rise again in October. For many paying even more for their energy bills is unimaginable but there is nothing they can do. And, in recent weeks, Ofgem decided that the energy price cap will be reviewed every three months rather than every six months like right now. That means that people’s energy supply will be getting more expensive every three months. 

But while millions of households in the UK have to brace for their energy bills reaching ridiculous sums, people in certain countries pay significantly less for their gas and electricity.  

Which European countries have the lowest energy bills? 

NationalWorld reported that in 2021 UK consumers ‘were paying 19.3p per kWh – 3.8p higher than the EU average. The figures include taxes such as VAT as well as other levies and charges.’ That was before the energy price cap so now the difference between what UK households and other European households are paying is even bigger.  

But which countries in Europe have the cheapest electricity prices? 

Electricity prices in the UK are, therefore, not the highest but they have been increasing at a rate faster than in other countries.  

Moreover, there are certain parts of the UK when energy is particularly expensive. In February, households in London paid the highest electricity prices in Europe. In London, the price for kilowatt hour is 43 eurocents. As living costs in London are also the highest in the UK, such expensive electricity costs make this place unlivable for low-income families. 

What are governments doing to avoid soaring energy bills? 

Of course, the UK is not the only country that has been dealing with an energy crisis. Countries across the continent have been facing rising costs of energy, primarily because of the war in Ukraine.  

Nevertheless, one of the reasons for certain countries having much cheaper energy bills is a more efficient government strategy. For example, ‘earlier this year the French government took action to protect consumers from price hikes by forcing EDF Energy to take a multibillion financial hit to protect households from the energy crisis,’ National World reported.  

In Germany, ‘The government said it plans to scrap a surcharge on electricity bills used to support renewable power.  

This would see a cut to the green surcharge that appears on home energy bills from 6.5 cents per kilowatt-hour to 3.7 cents. 

The government is also putting €130 million in subsidies in place for lower income households. Eligible households of one person would receive €135, a two person household would receive €175 and there would be €35 per additional person after that,’ EuroNews reported.  

EuroNews also said that ‘Spain cut several taxes to try to reduce consumer bills, originally planning to maintain the lower rates until the end of the year, before deciding in December to keep them lower until May 2022.’ and that ‘the government also aims to raise €2.6 billion through a tax on the increased profits energy companies are set to enjoy from the soaring prices.’ 

In the Netherlands, the cabinet agreed in October to cut energy taxes in order to save households an average of €400 (£332.79) a year. In addition, some €150m is being set aside to boost home insulation. A further €500m will be used to compensate small firms in the form of lower energy taxes,’ said the Guardian.  

The UK government has not been indifferent to the impacts of the energy crisis on UK citizens and, as Allianz wrote,  ‘announced a “rebate and clawback” scheme (total cost of EUR10bn), which will loan energy companies funds to give all households (around 28mn) a GBP200 rebate on their annual energy bills from April 2022, with GBP150 extra for lower-income households. These measures will limit the increase of electricity prices next April to +39% instead of +54%.  

Nevertheless, many have criticised these measures as inadequate when looking at the imminent increases to energy bills.  

Why do energy prices vary across countries? 

Gas and electricity prices vary from country to country because of several factors, which include: 

Geopolitical situations, for example, the Russian invasion of Ukraine, which triggered high wholesale energy prices in Europe 

National energy mix, which refers to a combination of energy sources used in a country 

Network costs, associated with maintaining pipes, cables, and wires 

Fees for protecting the environment 

Taxes.  

Each country is different and generates energy in a different way. In the UK, for example, 40.1% of energy is generated from gas, 21.1% from wind, 15.3% from nuclear sources, 12.8% from biomass and renewables, 4.1% from solar, 2.8% from oil, 2% coal, and 1.8% from hydro. When these proportions are different, so are the costs of generating energy.  

Countries that rely primarily on renewables are less vulnerable to the changes to wholesale energy prices so, even if these go up, their costs of generating energy stay the same and consumers can enjoy lower energy bills. Scandinavian countries, for example, generate most of their energy from renewable sources, which is why electricity prices there are amongst the lowest in Europe. That can seem surprising given how costs of living there are very high. 

Therefore, to tackle the problem of rapidly increasing energy bills, the UK needs to make generating energy from renewable sources and producing clean energy a priority.