Energy prices to remain significantly high for nearly a decade
With the ongoing news about rising energy costs, research shows that energy prices are set to remain substantially above average up to the year 2030 and possibly after that.
Tom Edwards the Senior Modeller at Cornwall Insight said:
“While we are used to seeing headlines depicting energy prices at an all-time high, unfortunately, while prices will reduce, our modelling shows that pre-2021 prices are not making a comeback this decade and likely beyond”.
In the next decade the importance of renewable energy will increase significantly. It is crucial that we make plans and changes for long-term generation as we see changes in the energy technology mix. For businesses, having a clear strategy on how you purchase energy possibly by making use of flexible energy contracts, will be more important than ever.
Research from Cornwall Insight looking at Great Britain’s (GB) Power Market out to 2030 has shown energy prices will remain in excess of £100/MWh annually. This is significantly above the five year pre-2021 historic average of £50/MWh in Winter and the even lower prices in pre-2021 Summer.
While prices will decline from the current levels, they will remain high according to Cornwall Insight’s Benchmark Power Curve (BPC) for the British Electricity Market which covers England, Scotland, and Wales. Prices are expected to rise to £150/MWh in Winter 2025 due to closures of nuclear power stations, delays to Hinkley C, and increasing high-cost peaking capacity.
Senior Modeller, Tom Edwards at the Cornwall Insight said:
“Rising EU demand for non-Russian gas has pushed up gas prices across the world, and these higher prices have increased production costs for power, with gas set to remain the marginal fuel source for producing power throughout the remainder of the 2020s. With all GB coal capacity due to close by April 2024 and many nuclear power stations coming to the end of their lives, high power prices will continue to feed through into consumer bills.”
However, with the help of renewable generation, capacity will quickly increase to meet targets and will help meet rising demand.