New analysis from Montel’s EnAppSys has revealed that power prices decreased by approximately 50% year-on-year (YoY) in Q1 2024 with record-high renewables output.
Day-ahead prices averaged around £65/MWh during the first three months of the year, down from £128/MWh during the same period a year ago and a 22% slump from Q4.
According to EnAppSys, renewables generation was the biggest contributor to Britain’s power mix in Q1, accounting for 47% of total output.
Renewables output, including biomass, wind, solar, and hydropower, reached 35.4 TWh, a 6% YoY increase and the highest quarterly figure ever recorded in the UK market.
Wind dominated the mix, reaching 25.2 TWh, a record high for any Q1 period. It was followed by biomass at 6.7 TWh, solar at 1.9 TWh, and hydropower at 1.6 TWh. Nuclear power generation fell to 7.9 TWh, down from 9.6 TWh in Q4 amid several outages.
EnAppSys director Paul Verrill said: “Wholesale electricity prices were generally on a downward trend through the quarter and dipped to very low levels during some weekends in January and February and subsequently below [zero] in the fourth week in March during periods of very low demand coupled with high renewable generation.”
Supporting statistics
This announcement shortly follows Cornwall Insight’s latest projections from its Q1 Power Curve, which suggested that the drop in power prices will continue until the end of the decade.
Costs are being forecast at £82 per MWh for 2024/25 and £84 per MWh for 2025/26, significantly lower than its previous forecasts.
According to the latest data, projected gas prices have significantly decreased, which could potentially provide relief to both businesses and households. The average gas price, which was predicted to be £94 per MWh in 2023-2024, has now dropped to approximately £79 per MWh as of March 2024.
Further into the future, prices are expected to remain largely level through 2027, falling again from 2028 as gas prices go down due to the supply of Liquified Natural Gas (LNG) and fossil fuels—with a higher marginal cost—being replaced by new renewables, such as solar, and both onshore and offshore wind.
National Grid ESO’s GB electricity mix for January also supported these trends, noting that wind and gas were campaigning for the majority of Britain’s electricity mix as they produced 33.3% and 35.7% of power, respectively.
Conversely, gas production plummeted between these dates, falling by over 35 percentage points from 51.8% on 18 January to 21 January, to never exceed a 38% majority for the rest of the month.
