Thursday 11 April 2024

European gas stocks drive down power prices

Cornwall Insight's projections indicate a sustained drop in power prices until the end of the decade, attributed to high gas stocks in Europe and a mild winter, offering potential relief to consumers
European gas stocks drive down power prices

Power price projections are on a downward trajectory, driven by abundant European gas stocks and a mild winter, according to the latest data from Cornwall Insight's Q1 Power Curve.

The recent figures suggest a significant decrease in projected prices, promising potential relief for households and businesses.

Gas prices, which averaged £94 per MWh in 2023-2024, have dipped to around £79 per MWh as of 26th March 2024.

Projections indicate a continuation of this trend, with costs forecasted at £82 per MWh for 2024/25 and £84 per MWh for 2025/26.

Compared to Cornwall Insight's previous Power Curve released in late 2023, these forecasts mark a substantial reduction of £31 per MWh and £27 per MWh respectively for the next two years.

Looking further ahead, prices are expected to remain relatively stable until 2027, before witnessing a decline from 2028 onwards.

This anticipated reduction is attributed to the increased supply of Liquified Natural Gas (LNG) and the replacement of high marginal cost fossil fuel technologies with new renewables such as solar, onshore and offshore wind.

However, despite the decrease, projections indicate that prices will remain above historic averages, partly due to Europe's dependence on international LNG, particularly in light of sanctions on imports from Russia.

Written by

Dimitris Mavrokefalidis

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