The mistakes that led to the UK’s energy crisis

Our energy market has not looked this bleak since the Winter of Discontent in the 1970s, a period seared into the memories even of those of us that are too young to actually remember it. For the past year, the chaos has been building, with rising gas and electricity prices, scores of failing suppliers, subsidies for just about every part of the market, and the prospect of, if not blackouts, then energy rationing this winter.

We’re told that the market is ‘broken’, that energy companies are ripping us off with profit maximising behaviours, that price formation in the wholesale markets is ‘frankly ludicrous’, and that Putin’s evil war in Ukraine is largely to blame. The public is both mystified and appalled, seeing ever more expensive bills, grappling with the fallout of their suppliers going bust, and hearing about the possibility of rationing or even blackouts.

So how did we get here and what can be done about it?

There are two things that have coincided to create the current situation: a set of long-term policy failures which are now crystallising, and the war in Ukraine – the timing of which may well be linked to the growing vulnerability of several European countries which have pursued poorly thought out energy policies.