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Current± Predicts: The energy transition in 2022, part five

Power prices are expected to remain high through the winter and into 2022. Image: Getty.

Power prices are expected to remain high through the winter and into 2022. Image: Getty.

Marzia Zafar, director of policy and sustainability at Kaluza

Green EV tariffs that protect against price spikes

In 2021, the average system price increased nearly six-fold between August and September to nearly £1000 per MWh. Consequently, many customers on time-of-use electric vehicle tariffs were left exposed to price spikes. Next year we will see more diverse tariffs across heating systems and electric vehicles that will help protect end customers from higher bills and instead reward them for investing in an electric car. Incentives like this will help drive up EV adoption and, in turn, help accelerate the scaling of public charging infrastructure so that soon we will have EV chargers on every street.

Survival of the nimblest

This year’s energy crisis has brought into sharp focus the need to adapt and stay nimble. The ability to weather market turbulence by switching strategy and tailoring propositions will be critical strengths for retailers next year and beyond. We will therefore expect to see more open-mindedness towards different technologies that offer operational flexibility and the opportunity for retailers to innovate to stay ahead in the market. Simply, it will become more risky for energy companies to not upgrade their tech.

The search for the holy grail continues

This year, a lack of wind helped trigger a supply crunch that was once again remediated by switching on dirty power plants. For decades now the industry has been seeking scalable and cost-effective storage solutions so our decarbonisation efforts aren’t hampered by the wind not blowing or the sun not shining. There is no silver bullet, however, in 2022 we will not only see improvements in industrial scale storage but also in small-scale flexibility.

More and more the industry is realising the power of utilising millions of homes as a giant battery, enabling us to turn static demand into dynamic demand and most importantly, reward energy customers. In 2022, I expect we will see new market momentum behind leveraging domestic flexibility, also reflected in policy.


Doug Stewart, chief executive of GEUK

Prices to stay high

Retail energy prices will increase significantly in April and remain high for the whole 2022 as a result of three factors:

  • The price cap will need to redress the costs incurred by the industry as a result of its backward-looking formula
  • The continued high wholesale gas prices
  • The industry levy recouping SOLR (supplier of last resort) costs attributed to orphaned customers of failed suppliers

This will mark a move towards energy efficiency instead of price.

The price cap will be removed

The Government will tire of being ‘responsible’ for energy prices as its ‘Kanute style’ policies fail to constrain the effects of international wholesale prices. The price cap will either be removed in 2022 or there will be a distancing of government policy from pricing throughout 2022 to facilitate a smooth political removal in 2023.

Ofgem to introduce further regulation

Ofgem will introduce regulation to stop companies taking up-front payments from customers.

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