Wind power cutting costs for UK energy users

Day-ahead wholesale electricity prices in 2024 could have been up to 33% higher if there had been no large-scale wind capacity and gas made up most of the difference, according to a new report.

The Energy and Climate Intelligence Unit said the gas crisis had exposed a weakness in GB wholesale electricity markets, with volatile international gas prices driving up the running costs of gas generators that usually set the marginal price on day-ahead markets.

Its report said various options have been proposed to try to reduce the influence of gas on electricity prices. However, it pointed out that renewables were already displacing gas power plants from the day-ahead market.

“This mechanism is often cited in the debate over the clean power transition, but does not seem to have been quantified publicly,” the unit said.

It said the findings are also relevant to the wider debate over the clean power transition, highlighting a ‘hidden saving’ that can be viewed alongside the costs associated with renewables.