Analysts cut power price forecast for 2024

Analysts at Cornwall Insight have cut their forecast for average wholesale power prices over 2024 by 12% due to higher than expected gas reserves in Europe, which have alleviated fears of shortages this winter.

The consultancy said they now expect power prices to average £113/MWh over the year – a reduction of £16/MWh when compared to their previous quarterly forecast of £129/MWh.

Its analysts have also lowered their forecasts for 2025 and 2026 from £119/MWh and £106/MWh respectively to £111/MWh and £103/MWh. They expect average power prices to continue falling beyond then to roughly £95/MWh in 2027 and £88/MWh in 2028, before levelling off at around £83/MWh in 2029 and 2030.

Nevertheless, Cornwall Insight said its forecasts remain significantly above the historic of £50/MWh due to Europe’s reliance on international shipments of liquefied natural gas to replace sanctioned imports from Russia.

In the medium term, the consultancy said the UK’s shift away from high-cost fossil fuels and towards more affordable renewable energy will put downward pressure on prices but this will be offset somewhat by increased exports to continental Europe, which will mean prices remain above pre-crisis levels until the end of the decade.

Cornwall Insight modeller Evelin Blom said: “Cuts to power prices will bring much-needed good news for GB households and businesses. With gas reserves easing supply anxieties in the short-term, lower power prices are on the horizon and we’re optimistic that this trend will trickle down to consumer bills.

“While this relief is welcome, GB consumers face a long road to truly affordable energy. The rise in electricity demand poses a significant hurdle, and without action, threatens to keep power bills elevated until the end of the decade and beyond.”