Gas Keeps Grip on UK Power Prices Even as Renewables Rise

Gas-fired power plants set UK electricity prices about two-thirds of the time last month, highlighting the fuel’s stubborn grip on the market even as renewable generation continues to climb.Author of the article:You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — Gas-fired power plants set UK electricity prices about two-thirds of the time last month, highlighting the fuel’s stubborn grip on the market even as renewable generation continues to climb.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.The data shows a growing mismatch between how Britain produces its power and how prices are set. Gas accounted for only about a fifth of the electricity mix in March, yet it mostly remained the country’s “marginal” fuel, the last — and most expensive — fuel brought on to meet demand.With gas costs rising sharply last month following the outbreak of war in Iran, the issue is front-of-mind for policymakers, not only in Britain but throughout Europe. The head of the International Energy Agency last week urged countries in the region to look at ways to sever the link between gas and power prices to keep a lid on rising energy bills for households and industry.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.“A fuel doesn’t need to dominate the generation mix to dominate the price formation,” said Ed Porter, European director at consultant Modo Energy. “The current pricing system masks the progress made by renewables, which isn’t always trickling through to prices.”In the UK, renewables — particularly wind and solar — supplied about 43% of electricity in March, close to a record, while gas made up only 22% of generation, according to the system operator. But with wholesale power prices typically determined by the costliest generator needed to meet demand, gas plants often set the price for all.This dynamic obscures the economic benefits of renewables and presents a dilemma for the government, which has insisted that investing in low-carbon power will bring bills down in the long run. Ministers have studied ways to decouple electricity prices from gas, but for now the system remains in place, causing pain for consumers bracing for another cost-of-living shock.UK day-ahead gas prices soared more than 60% in March, according to broker data compiled by Bloomberg. That drove power to the highest levels for the time of year since 2022, Epex Spot SE data show. With the war continuing to roil the market, the country’s cap on energy prices is expected to surge 18% this summer, according to consultants Cornwall Insight Ltd.Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.365 Bloor Street East, Toronto, Ontario, M4W 3L4© 2026 Financial Post, a division of Postmedia Network Inc. All rights reserved. Unauthorized distribution, transmission or republication strictly prohibited.This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.You can manage saved articles in your account.and save up to 100 articles!You can manage your saved articles in your account and clicking the X located at the bottom right of the article.