Octopus Energy has issued a three-month warning to customers after revealing that UK households have already paid over £1.5 billion for wind farms to be switched off while expensive gas plants are fired up instead. The £1.5 billion milestone was reached three months earlier than last year, according to the energy supplier's Wasted Wind tracker.
September recorded seven of the most expensive days ever in the history of the tracker, with the single most costly day being 30th September, when £30 million was paid out to wind and gas generators in just 24 hours.
Costs could soar to £3.2bn by July 2027
The energy firm, which serves households in Birmingham and across the UK, warns that costs could rise to £3.2 billion by July 2027. These expenses accumulate when Britain's grid cannot transport all the electricity being generated to where it is needed. Wind farms in Scotland are regularly paid to switch off, while expensive gas plants are paid to generate replacement power.
The system operator NESO forecasts £3.2 billion in constraint costs in the year to July 2027, while the government has warned that costs could reach £10 billion by 2030.
Pricing reform could save households up to £114 a year
One potential solution is to introduce a wholesale pricing system that better reflects where power is being generated and where it is needed, following the example of other OECD countries. Analysis by FTI, commissioned by Octopus Energy, shows that such a system would cut bills across Britain, with a typical household saving up to £114 a year.
Greg Jackson, Founder and CEO of Octopus Energy, said: “We've already blown past last year's entire bill, and customers are paying every pound of that waste. It's madness.”
Jackson added: “We're spending billions to build more grid, while failing to use our existing infrastructure more efficiently. Instead of paying to throw away homegrown cheap power, we should be using it to bring bills down for households and businesses.”
Higher gas prices worsen the problem
Higher gas prices, driven by geopolitical turmoil, are also pushing up the cost of replacing cheap wind power. The combination of grid constraints and rising gas costs means that the financial burden on consumers continues to grow, with the full impact expected to be felt in the coming months as the £3.2 billion forecast approaches.
