Energy price volatility set to continue into 2030

Analysts have warned that UK energy prices could continue to be volatile into the 2030s if the Government doesn’t provide greater resilience.

It has been forecasted that the cost of energy could jump between £95 per megawatt hour between summer and winter and the seasonal difference will increase to approximately £120 per megawatt hour by 2030.

Contributory factors which are expected to leave UK energy prices vulnerable to instability include:

• Increased weather risks
• Just in time energy procurement
• Overreliance on insecure energy imports
• Reduction in nuclear power
• Reduction in coal power

The current focus has been on wholesale prices for the short-term and energy price caps, but as we look forward to 2030, nuclear power stations start to retire, and with the additional closure of coal fired power stations across Europe, this reduction in generation will bring a new period volatility to the UK energy markets. To avoid boom and bust energy pricing, the UK needs a significant change to the way we procure, store, supply and consume energy.

Its not all doom and gloom

Whilst the situation could be grave, it is not all doom and gloom. On the contrary, organisations don’t have to accept these imposed price hikes and can take measures to mitigate the potential risk these volatile times bring. Furthermore, it doesn’t have to cost the organisation to achieve this.

Self-generation from sustainable technologies such as solar pv or combined heat and power will provide significant resilience and independence from the grid and when used in conjunction with battery storage will maximise efficiencies, getting the power you need, when you need it and at a predetermined cost that’s right for your enterprise for a decade or more.  

Such technologies or combinations of technologies are readily available and are being increasingly adopted as we get closer to our 2030 and 2050 climate neutrality targets. Businesses that have the capital and desire to invest in this energy revolution will realise the quickest and largest returns on their investment, whilst businesses with differing priorities can still benefit and significantly reduce costs and emissions without the need for capital outlay through our corporate PPA and funded solutions.

Source: Cornwall Insight