Predicting the Price of Electricity

The best case scenario predicted by the National Grid is that the price of electricity could increase two-fold for the next 20 years, given recent surges in power prices. This can certainly happen given the present energy situation in the country. However, the actual increase of the price of electricity could also be just half as much.

The problem with predicting the price of electricity is that there are so many factors and variables that can influence the flow of events. From past experiences, it is not unusual for predictions to be more wrong than right.

Even so, by looking at the present situation and the attendant evidences, we can see that when the prices of a large portion of electricity supplied by various sources such as solar and wind are falling fast, it invariably results in the reduction in the wholesale price of electricity.

But then again, the practice of undertaking economic programs based heavily on the price of electricity going down is not wise as proven by the problems that ensued in the California energy crisis in 2001. The evidence also shows that electric bills are often low in an energy system if there are real and concrete measures to lower the overall energy demand and to improve energy efficiency.

It is a sad fact that neither of these two positive measures is being implemented in the UK. Hence, it is only safe to predict that the price of electricity would go up constantly.

Price of Electricity Data

Based on collected data, the price of electricity has gone up by 20% since 2009. The reason, as some have claimed, is the closure of an increasing number of coal-fired power plants and the heavy subsidies given by the government to a big number of wind farms.

Wholesale electricity is currently pegged at £50 per megawatt per hour. Using the example set by the National Grid’s UK Future Energy Scenarios report, this figure could go up to £100 by 2035. In the same vein, the main pipes and pylons group operators in England and Wales also expects the wholesale gas price could also rise from 70p per therm to approximately 100p per therm.

To predict a conservative price situation, these forecasts were combined with more modest price increases under different scenarios. Even then, the result will give householders and energy-intensive businesses more reasons to worry since they are already strapped with ever increasing electric bills.

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It is important for the government to put customer concerns of first importance if they really want the price of electricity to fall. If this is the primary goal of those in charge of the power and energy policies in the country, then the prediction of falling wholesale electricity prices will not be just a fantasy.

The move of the National Grid to encourage big energy users to temporarily cut back on their energy use when supply is not able to keep up with the demand is laudable and should be continued. On a larger scale, energy wholesalers could offer their users tariff based on the National Grid’s spot market price, in real time.

The Author

Motivated and dynamic journalist with a strong interest in sustainable solar powered technology. My work in journalism and new media has provided me with a medium to produce content concerning emerging renewable energy.

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