Power prices will remain low through to 2020 on the back of demand reduction and growth in interconnectors and renewables according to Moody’s.
In a report published today, the ratings agency said it expects demand to fall by 325MW a year and that growth in distributed generation will continue to erode transmission demand.
Moody’s said UK carbon taxes would likely keep average power prices significantly above mainland Europe’s, thereby driving interconnector growth. An increase of interconnector capacity from 3GW to 7.4GW by 2020 would drive power prices down to European levels in ties of peak demand, said the firm.
Lower prices will likely see Centrica and SSE closing more thermal plants, said Moody’s, and will be a negative for renewables generators. National Grid’s growing interconnector operation will see upside, according to the firm.