Energy prices are still on the front pages. The UK's wholesale gas price hit a three-year high this month, spiking by 93% in the first week of March. Understandably, many businesses are asking whether we're heading for a repeat of the 2022 Energy Crisis.

Events like these raise bigger questions, too: why are UK energy prices so exposed to geopolitical events happening thousands of miles away? In an age of renewables, why does the price of gas still drive the price of electricity? And how long can businesses be expected to absorb shocks that are completely outside their control?

Here's a quick guide to an energy system that was not designed with the many in mind.

Why are energy prices spiking?

It feels counterintuitive, especially when you're buying renewable electricity. Supply disruptions in global gas markets - reduced pipeline flows from Russia, competition for LNG cargoes, and a cold European winter drawing down reserves - all feed into the UK spot price for gas. And because of how UK electricity is priced, that matters enormously.

UK electricity prices are tied to gas prices through a system called marginal pricing. Suppliers buy electricity on the wholesale market from a range of sources - the usual culprit with gas, but also sources we've all grown familiar with: solar, hydro, wind, nuclear, anaerobic digestion. The price is set by the most expensive source needed to meet demand at that moment. And around 85% of the time, that's gas.

When gas prices rise - because of shortages, conflict, supply disruptions, or even just bad weather - electricity prices rise with them. The electricity you're using may come from a solar farm in Sussex or wind turbines in Scotland, but the price is still set by what gas costs on the global market.

But we're generating more renewable energy than ever. Why doesn't that help?

Today, only around a quarter of the UK's electricity actually comes from gas. With wind and solar now making up a growing share of UK generation, you might expect that to drag the average price down - and, in theory, it should. Renewable energy is cheaper to generate, and the more of it we have, the less often gas needs to be called on at all.

But the wholesale market was built for a UK that was heavily dependent on fossil fuels, and it hasn't kept pace with how the grid has changed. Even as renewables dominate generation, the system still prices electricity at the cost of the most expensive source. That means every geopolitical shock gets passed straight through to businesses - even if your contract says you're only paying for renewable energy.

The energy wholesale system is holding business back

Unpredictable energy costs squeeze margins and make forward planning harder. When prices rise, businesses absorb the increase quickly. When prices fall, suppliers are slow to pass on the savings. And with little transparency in how energy is priced, it can be difficult to understand exactly what you're paying for - or why.

None of this is your fault. The system was designed this way. And knowing that is, at least, a starting point: what was designed can be redesigned.

The system is not working for anyone except energy suppliers, and there is little sign of government policy that would change things. In our recent survey, 87% of businesses said the energy system needs to change. But 84% said they do not believe there is a credible government plan to fix it. The recent Spring Statement did little to suggest otherwise.

What would actually fix it?

The UK doesn't have a generation problem. The problem is pricing: the wholesale infrastructure keeps tying the cost of clean energy to the cost of fossil fuels.

Fixing that means moving away from a system that hides its costs, passes its risks to customers, and leaves businesses exposed to forces outside their control. It means connecting people who use energy with the people who generate it, here in the UK. And it means showing customers exactly what they're paying for, so they can plan properly.

That's what we're working on at tem. We can't stop gas prices from spiking. But we have built a system where those spikes don't automatically become your problem.