Your Annual Bill
💡 UK average bill (2024): £911/year
🔥 The Smoking Gun
Current UK bill (2024): £911/year
What generation actually costs (renewable mix):
~£420
What backup/grid/balancing costs (hidden):
~£340
Honest cost of the system:
~£760
Your actual bill:
£911
Why? Taxes (£261) + supplier margins + grid inefficiencies. The system hides the true cost.
How these numbers are built
Most "cheapest energy" headlines quote levelised cost of electricity (LCOE) — what it costs to build and run one power station, divided by the units it produces. That number tells you nothing about what it costs to keep the lights on when the wind drops. This calculator adds the rest of the system back in.
What each cost line means
- Generation — levelised cost of the plant itself: build, finance, fuel, operate, decommission. This is the number you normally see quoted.
- Transmission — grid reinforcement and connection costs. Higher for wind and solar, which are built far from demand and need new lines.
- Balancing — what the system operator spends second-by-second keeping supply and demand matched, including constraint payments to turn generators off.
- Capacity market — payments to keep firm capacity available for the hours the source isn't producing.
- Backup / flexibility — the cost of the batteries, interconnectors and standby gas that fill the gaps. Zero for firm generators that run around the clock; the dominant hidden cost for solar and wind.
Assumptions
- Figures are per megawatt-hour delivered, in 2025 money, for a Great Britain system.
- Each scenario is a deliberate thought experiment: what if the grid leaned heavily on this one source? Backup costs are attributed to the intermittent source that creates the need for them, rather than socialised across the whole system as they are on your actual bill.
- The bill panel multiplies system cost by your consumption. It is the cost of supplying your electricity — it excludes VAT, policy levies, standing charges and supplier margin, which is why it comes out below a real bill.
- Household baseline: 2,800 kWh/year, the Ofgem typical domestic consumption value for a medium electricity-only household. Average annual bill of £911 is the 2024 figure.
- Hinkley Point C is shown at its strike-price-inflated real-world cost; the SMR line uses Rolls-Royce's target unit cost, which is a projection, not a delivered price.
Read this before quoting the numbers. Whole-system costing is contested territory — reasonable analysts land on very different backup figures depending on how much storage, interconnection and demand flexibility they assume. These are Decarbonarma's working assumptions, built from the sources below, not an official government or regulator figure. The point of the tool isn't the third decimal place: it's that the hidden share of the cost is large, and comparisons that ignore it are comparing the wrong thing.
Sources
Lazard Levelized Cost of Energy+ (2025) · DESNZ electricity generation cost estimates and Contracts for Difference strike prices · NESO Balancing Costs and Capacity Market reports (2024–25) · Ofgem price cap and typical domestic consumption values · Grantham Institute, Imperial College London, on whole-system costs of intermittency.
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