Exports directed at plugging gaps in continental baseload will keep UK power prices at historically high levels for the rest of this decade, latest analysis by advisors Cornwall Insight predicts.
Wholesale prices are likely to remain above the £100/MWh benchmark into the early 2030s, driven by factors including depressed or declining nuclear output on the continent, and structural changes including the electrification of industry & transport, say the consultants.
“Lower French nuclear production is expected to increase the scope for power exports from Great Britain”, they advise, after looking again at UK market numbers in 2023’s first quarter.
France’s nuclear fleet has been suffering extensive outages due to maintenance issues, frequently unplanned. In the past two years, as many as half of the nation’s 28 plants have been off line at any one time.
Germany finally closed the final three of its nuclear stations last month, a year later than scheduled.
Cornwall’s latest research says increased exports, plus the wider electrification of the economy, particularly for heat and transport, lead them to revise upwards their long-range price predictions made late in 2022.
Over the next five years, the recent fall from last year’s historic peaks will continue, the analysts believe, as sources of low-carbon generation are brought online. Greater availability of renewable generation, mainly wind, will drive the positive trend, Cornwall’s senior modeller Tom Edwards believes.
But beyond 2028, the £100MWh figure will serve as a floor, from which prices will resume their upward curve.
“In the long run, electrification of the economy is predicted to raise the demand for renewable power, driving up price forecasts”, Edwards writes. “(This) will likely result in power costs levelling out at a higher rate, surpassing pre-pandemic levels”.
“The outlook suggests that we have come through the worst of the current energy crisis and that the exceptionally high prices seen over the past two years will continue to fall. However, the market is finely balanced and consequently susceptible to price shocks arising from any unforeseen circumstances. Continuing the decarbonisation agenda remains the best way to insulate the market and consumers from similar prices in future”
Read Cornwall’s analysis here.