New forecast warns power prices to remain elevated until late 2030s

Cornwall Insight has unveiled its latest GB Power Market Outlook to 2030, revealing that power prices in Great Britain will not shift below pre-2022 levels until the late 2030s. The report cites the surging demand for power as the main driver behind this trend, as the move to electric heating and transport over the next decade places increasing pressure on the grid.  

In the short term, the introduction of low-carbon, cost-effective energy sources is predicted to drive prices downward, with prices expected to fall below £100/MWh by 2028, two years earlier than previously projected. However, as we approach 2030, the transition to more affordable renewable energy sources will be accompanied by the increasing electrification of the economy. In order to ensure a consistent power supply during periods of low wind, gas will need to play a role in filling the gaps and maintaining system stability.

To compound concerns, the deteriorating state of French nuclear capacity means GB will be exporting more power to the continent over the next decade, also contributing to the levelling out of prices above pre-pandemic levels.

The forecast underlines the critical importance of long-term preparedness as the country progresses towards its net zero goals, highlighting the urgent need to develop batteries and long-term storage solutions to ensure adequate energy capacity even during periods when renewable power generation is limited.

Figure 1: Power price forecasts – average price per fiscal year

Source: Cornwall Insight Benchmark Power Curve

Tom Edwards, Senior Modeller at Cornwall Insight, said:

“Our latest long-term power forecast reveals a changing and complex landscape for the energy market in Great Britain. The challenges of rising power demand, increasing exports and reliance on gas continue to keep our power price forecasts above historical levels for many years to come. Despite these concerns, we continue to be optimistic about the positive impact of low-carbon, cost-effective energy sources and favourable gas price trends. We are pleased to see prices expected to fall below £100/MWh sooner than previously anticipated, which offers consumers a glimpse of the benefits of the ongoing energy transition.

“It is of utmost importance that the government and other decision-makers fully comprehend the urgent and pressing need for continued investment in renewable energy sources and innovative solutions. The time to act is now. We must invest in long-duration storage technologies, nuclear power and Carbon Capture Usage and Storage that can effectively bridge the gap between intermittent renewable generation and maintaining a consistent energy capacity. Bolstering the chance of success in our transition to a sustainable future.”

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Notes to Editors

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About the Cornwall Insight Group

Cornwall Insight is the pre-eminent provider of research, analysis, consulting and training to businesses and stakeholders engaged in the Australian, Great British, and Irish energy markets.