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Wholesale Electricity Prices Hit Second Highest Level in 3 Years on Monday

Struggling energy suppliers and wary households looking for respite from spiralling gas and electricity prices will be disappointed. With gas prices still sky-high and low wind speeds stilling turbines, wholesale electricity prices surged to more than £2,000 per megawatt-hour between 5 pm and 6 pm Monday—only the second time they have broken this barrier since 2018.

Low wind speeds pushed wind power’s share of generation to 4% on Monday, a fraction of the average of 21% supplied over the last year, according to Drax Electric Insights. At some points on Monday, wind generation fell below 3%, figures from National Grid’s Electricity System Operator (ESO) reveal.

That forced the grid to turn to gas-fired power plants, despite heavy gas prices, to keep the lights on. On Monday gas plants met nearly 55% of Britain’s electricity demand, up from their typical contribution of 40%. Britain’s three remaining coal-fired power stations, often sidelined when renewables generation is high, contributed another 3%.

Wind speeds have been low throughout the year across Europe: April to September was the least windy period in the last 60 years in the UK and parts of Ireland. This hit the profits of renewables giants Scottish Power, SSE, Orsted, and RWE, and forced the British electricity grid to rely more heavily on fossil fuels, exacerbating the impact of gas shortages and stratospheric prices.

Natural gas prices across Europe are high due to an unexpected demand from reopened economies and strangled supplies from Russia—a shortage some politicians allege is being engineered by Putin.

Monday’s electricity price spike was below the peak of £2,500 per MWh reached in mid-September. But they spell trouble for energy suppliers this winter, particularly as low temperatures increase demand.

Anna Moss, head of consumer markets at Cornwall Insight, said: “The very high wholesale prices have caused significant distress even before winter begins. How suppliers fare is in the hands of wholesale trading parties, and how suppliers can manage their costs through the winter months ahead.”

Twenty energy suppliers have folded since August, and market watchers warn that more than a dozen could follow, potentially leaving Great Britain with just five or six suppliers. Sky-high wholesale prices will also contribute to higher bills for consumers when the price cap is next adjusted in April. It's been speculated it will rise by between £400 and £600.

Lauren Smith
Lauren Smith

Lauren Smith has worked as a journalist and copywriter for most of the last decade, covering technology, energy, and consumer rights, in the US and UK.

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