What is going to happen to energy prices in the next few years?

Predicting what energy markets will do is no easier than predicting any other commodity. Indeed, simply working out what the price of energy has been in the past is difficult, because there is so much data available, presented in so many different ways, to suit so many differing vested interests.

Nonetheless, some general trends are apparent:

  • We do know that the national supply of both power and heat is under growing strain. The weight of informed opinion, as well as current purchasing information, suggests that the UK supply for the next 5 to 10 years is likely to be volatile but rising, especially in the provision of power. We do also know that retail prices have already risen a lot this year.
  • Current indicators are that grid power prices are likely to increase substantially in the next few years, owing to a shortage of provision and, ironically, the rising burden of government levies to fund the transition to renewables.
  • Therefore, goes the logic, estates should be looking for cost-effective ways to reduce their reliance on grid power.

This chart shows the National Grid’s own assessment of wholesale power price inflation. The wholesale price represents about half of what the consumer pays for power. The rest is made up of infrastructure charges and government taxes and levies.