Understanding the energy crisis

The term “energy crisis” is commonly used to describe the period when gas and electricity prices rose sharply, putting pressure on household bills and business energy costs across Great Britain.

In this context, the energy crisis is mainly linked to higher wholesale gas prices. Because gas is used for heating and also plays a role in electricity generation, rising gas prices can affect both gas and electricity bills. In 2026, gas accounted for around 22.6% of UK electricity generation, showing why changes in gas prices can still influence electricity costs.

The energy crisis is generally considered to have started in 2021, when wholesale gas prices began rising sharply. The effects became more visible for households and businesses as energy suppliers came under pressure and gas and electricity bills increased.

Key points in the timeline include:

• Early to mid 2021: Wholesale gas prices began to rise, creating pressure across the energy market.

• Autumn 2021: The effects became more visible in Great Britain, with several energy suppliers leaving the market as wholesale costs increased.

• April 2022: The energy price cap rose significantly, meaning many households saw a sharp increase in their gas and electricity bills.

• October 2022: The price cap rose again, although the government’s Energy Price Guarantee limited the amount many households paid per unit of energy.

• After 2022: Prices fell from their peak, but bills did not return to the levels seen before the crisis began.

This is why the term “energy crisis” is still often used when discussing high energy costs in Great Britain, even though the sharpest price increases happened in 2021 and 2022.

If you are wondering why energy is so expensive, the answer is not one single issue. The energy crisis was caused by a combination of global supply and demand pressures, rising wholesale gas prices and disruption in international energy markets.

Because Great Britain uses gas for heating and for some electricity generation, higher gas prices affected both gas and electricity bills.

The main causes included:

Overall, what caused the energy crisis was not one single event, but a combination of market pressures. In other words, what is causing the energy crisis can be understood as a mix of supply disruption, higher demand and wider market pressures that led to higher wholesale energy costs and, in turn, higher bills for many households and businesses.

Although energy prices have fallen from their peak in 2022, many households and businesses across Great Britain may still be facing higher energy costs than before the energy crisis began.

Some of the most widely felt impacts of the energy crisis include:

• Higher household energy bills: Many households saw their gas and electricity bills rise during the energy price crisis. In some cases, bills increased even when households used a similar amount of energy, because the unit cost of gas and electricity had become more expensive.

• Pressure on the cost of living: Higher energy costs contributed to wider cost-of-living pressures. Energy is used across transport, food production, manufacturing and services, so rising energy prices can affect the cost of everyday goods and essentials.

• Increased strain on businesses: Businesses also faced higher energy bills, which increased operating costs. For some businesses, this added pressure to supply chains, pricing and day-to-day operations. If you are a small business owner, you can read our money-saving tips for businesses.

• Pressure on energy suppliers: Several energy suppliers left the market during the peak of the energy crisis. If your supplier goes bankrupt, Ofgem’s safety net means your gas or electricity supply will continue while you are moved to a new supplier.

• More households needing extra support: Higher bills have led some households to seek additional help from their supplier, advice organisations or support schemes.

If you or someone in your household has extra access, communication or safety needs, you may be able to register for the Priority Services Register, a free service that provides additional support to eligible households across Great Britain.

Following the rise in gas and electricity prices, the government and regulatory bodies implemented schemes to limit some of the impact on households and businesses. Some support schemes were temporary and have now closed, while other protections remain in place.

Key examples include:

• The energy price cap: The energy price cap is set by Ofgem, the energy regulator for Great Britain. It limits the unit rates and standing charges that suppliers can charge customers on default tariffs. The cap is reviewed and updated every three months. It does not limit your total bill, as the amount you pay still depends on how much energy you use.

• Temporary energy bill support schemes: During the peak of the energy price crisis, the government introduced temporary schemes to help with household energy bills, including the Energy Price Guarantee and the Energy Bills Support Scheme. These schemes have now closed, but information about past support is available on GOV.UK.

• The Warm Home Discount Scheme: The Warm Home Discount Scheme offers eligible households a one-off discount on their electricity bill during the winter. For winter 2025 to 2026, GOV.UK described this as a £150 discount for eligible customers in Great Britain.

• Ofgem’s safety net: Ofgem’s safety net is designed to protect customers if their energy supplier goes out of business. If this happens, Ofgem appoints a new supplier, and customers’ energy supply is protected.

These measures were introduced to help with high energy costs and market disruption. Some reduce costs for eligible households, while others protect consumers and help keep energy supplies running.

While it is not possible to know exactly how energy prices will change in the future, there are steps households can take to help manage energy use and reduce avoidable costs at home.

Some options include:

• Improve insulation and draught-proofing: Reducing heat loss can help your home stay warmer for longer. This could include larger improvements, such as loft or cavity wall insulation, or smaller changes such as using draught excluders, sealing gaps and fitting thermal curtains.

• Use energy more mindfully: Small changes may help reduce wasted energy over time. This could include turning appliances off standby, using heating controls effectively, washing clothes at lower temperatures where appropriate, or only heating the rooms you’re occupying.

• Check whether you are eligible for grants or support schemes: Some households may be able to access support for energy-saving home improvements. For example, schemes such as the Energy Company Obligation may help eligible households make improvements that reduce heating costs. Eligibility can depend on your circumstances, property and where you live.

• Review your energy tariff: Some suppliers offer fixed-rate, variable or time-of-use tariffs. The right option will depend on your household, how much energy you use and when you use it. It can be worth checking what tariffs are available and comparing them carefully before switching.

Although the peak of the energy crisis has passed, many households are still managing higher energy costs than before prices began rising. Having a smart meter installed will not reduce energy use on its own, but it can help you see how much energy you are using and what it could be costing you.

Smart meters usually come with an in-home display, which shows your energy use in near real time. This can make it easier to understand how your usage changes when you run different appliances, adjust your heating or use energy at different times of day.

Having this information can help you make more informed decisions about your gas and electricity use. Smart meters also support a more flexible energy system, which can help with the transition to lower-carbon energy in Great Britain.