The wholesale electricity price is the price at which electricity is bought and sold in bulk between generators and suppliers, before network costs, policy costs, supplier costs and tax are added. It changes every half hour, and much of it is traded months or even years ahead.
How the price is set
Suppliers buy the power they expect their customers to need, and generators sell what they expect to produce. The cheapest sources, such as wind, solar and nuclear, are used first. The most expensive generator needed to meet demand at a given moment sets the price for the market as a whole. This is called marginal pricing.
In Great Britain that last, most expensive source is usually a gas power station, so wholesale electricity prices tend to rise and fall with the price of gas and of carbon allowances.
| Measure | Figure | Source |
|---|---|---|
| Share of time gas sets the price, early 2020s | about 90% | DESNZ |
| Share of time gas sets the price, April 2026 | about 60% | DESNZ |
| Expected share by 2030 | about half (DESNZ); 30% (Ofgem, from NESO modelling) | DESNZ, Ofgem |
The two 2030 estimates come from different modelling, but both expect gas to set the price less often as more renewables and storage connect.
Link to household bills
Ofgem’s energy price cap is set every three months and includes an allowance for wholesale costs, based on forward prices over an observation period before each cap. Because suppliers buy energy in advance, changes in wholesale markets reach bills with a delay. For October to December 2026, wholesale costs, including Contracts for Difference, made up 47% of the cap for a typical dual-fuel household paying by direct debit, up from 44% the previous quarter.
In April 2026 the government announced plans to offer existing low-carbon generators voluntary fixed-price contracts, intended to weaken the link between gas and electricity prices.
Read more: Energy price cap tracker.