Volatile energy prices in the UK could continue into the 2030s without Government action to deliver greater resilience, analysts have warned.
Research from Cornwall Insight forecasts that from 2026 prices could become increasingly volatile, jumping by £95/MWh between the summer and winter and the seasonal differential will increase to nearly £120/MWh by 2030.
It warned a combination of just in time energy procurement, an overreliance on insecure energy imports, increased weather risks and a reduction in nuclear and coal power stations will leave UK energy prices vulnerable to instability into the next decade, unless action is taken.
Tom Edwards, Cornwall Insight’s senior modelling consultant, said: “With all the focus of the recent energy crisis being on wholesale prices for the short-term and the imminent price caps, you would be forgiven for thinking that volatile energy markets are simply a problem for the present, not the future.
“Looking ahead to the start of the 2030s, we can see that once the nuclear power stations start to retire in greater numbers and the coal fired power stations have closed for good, there is a new period of volatile pricing coming to the UK energy market.”
Edwards said increasing the UK’s longer-term energy storage facilities “could go a long way” to reducing seasonal variations, and it will also be important to deliver change on the demand side, with investment in energy efficient housing and electric vehicles having the potential to considerably reduce the level of power plant capacity needed.