Energy import cost doubles to £117bn as price cap sends borrowing to record high
Britain’s energy import bill has more than doubled to £4,200 per household, new figures show, as soaring gas and electricity costs also push government borrowing to a record high.
Annual UK fuel and power imports rose to £117bn in 2022 – up from £54bn the year before – driven by Russia’s war in Ukraine, inflation, and higher worldwide demand post-Covid.
Offshore Energies UK (OEUK) said the sum was a record, even though Britain has been an “importer of energy since 2004” and reliant on other countries to “meet its energy needs”.
It came as the Office for National Statistics said the government’s support scheme for energy bills led to a £9.7bn year-on-year leap in government borrowing in February, to £16.7bn.
The cost of energy support has now reached about £34bn since it was put in place last October to help households and businesses cope with rocketing gas and electricity bills following Russia’s invasion of Ukraine.
Chancellor Jeremy Hunt announced in last week’s Budget that the energy price guarantee, capping bills at £2,500 a year, will be extended for households for another three months, from April to June.
The ONS said public sector borrowing was the highest February figure since monthly records began in 1993 and higher than expected by most economists.
OEUK, which represents North Sea producers, said the UK spent about £63bn importing crude oil, petrol, diesel, and other oil-based fuels in 2022, £49bn on gas and the rest on coal and electricity to make a total of £117bn.
Ross Dornan, a markets intelligence manager, said: “What these figures show is the risk and cost of relying on other countries for our energy security – and how far we are from reducing that reliance.
“About three-quarters of the UK’s total energy comes from oil and gas – a proportion that has stayed constant for many years. We now rely on other countries for about half that supply, a proportion that will increase rapidly, especially if North Sea production is allowed to decline faster than UK consumption.”
He added: “The UK is on a three-decade journey to net zero and self-reliance but that needs long-term planning to reduce the demand for oil and gas. The UK has nearly 24 million homes heated by gas. We also have 32 million cars fuelled by petrol and diesel.”
Meanwhile, MPs have been told Britain could be saving £17bn every year if it builds a flexible electricity system using small-scale storage.
Rachel Fletcher from energy supplier Octopus suggested managing when households use electricity and figuring out how to store it at other times.
“Lots of studies have suggested we could be saving £16-17bn a year if we actually properly harness the flexibility that we will have in our homes, in our vehicles, in small-scale storage as well as grid-scale storage and interconnectors across the country,” she told the business, energy and industrial strategy committee.
Laura Sandys, the chair of the government’s Energy Digitalisation Taskforce, also argued that it should be easier for consumers to understand the benefits of renewable energy on their bills.
It should be “explicit on our bills that we’re actually getting a decarbonisation dividend … because I do think that in the chaos that’s happened over the last two years, consumers have really started to lose trust”.