The UK will face higher energy prices for a decade, experts say, until increased renewable electricity generation brings costs back below last year’s levels.
Energy prices are expected to peak at £5,000 for the average household next year before falling again.
This is more than four times the level seen last year, and the latest evidence suggests that the pain will last for several years.
Consultancy firm Cornwall Insight said record high energy prices sparked by the war in Ukraine have begun to spur investment in renewable energy, but it will be some time before consumers feel the benefits.
Interconnectors used to export energy between countries have also recently been connected to the grid, making it easier to transfer electricity.
This is seen as a vital development in the wider deployment of renewable energy, which is based on intermittent generation dependent on the weather at a particular location.
Tom Edwards, senior modeling officer at Cornwall Insight, said the focus on massive short-term increases in electricity bills meant it was hard to see the long-term picture.
“Our new data forecasting a fall in electricity prices from 2024 to 2030 shows that markets and governments are responding to current higher prices with new investments in renewable energy to strengthen energy supply.
The reduction in the flow of gas from Russia to Europe has given governments serious thought about the security of their energy supplies and how they will keep the light on this winter and beyond.
Renewable energy sources such as solar and wind “fit this requirement,” Mr. Edwards said.
“Our data shows the market gains from growing renewable energy investment as growing competition for renewables in the UK pushes prices down and helps stabilize the energy market over the next few years.
“It is hoped that the savings will be passed on to consumers, provided Ofgem’s price cap methodology remains in place, the reduction in wholesale electricity prices should be reflected in the maximum tariffs that suppliers can set.
“While this is positive news, we must acknowledge that prices are projected to remain above average through 2021 through 2030. It is important that the UK and other countries stay on track for low-carbon production, which, along with other measures to improve energy security, such as additional imports of nuclear energy or various gas, will be one of the key players along the way.”
The report was released after experts warned that the ceiling on energy prices could top £5,000 next year, according to the bleakest forecast for distressed households.
Auxilione, an energy consultancy, said current market prices indicate regulator Ofgem could be forced to set a limit of £5,038 a year for the average household for three months starting next April.
This is more than £200 higher than previous forecasts and is putting additional pressure on households across the UK.
This forecast is likely to worry energy consumers more than April’s higher figure as households consume more gas during the winter months.
As it stands, the nightmare scenario would mean that the average household would spend £571 on energy in the month of January.
Credit: www.independent.co.uk /