Good Energy Group plc
Good Energy Group plc
10/02/2024 | Press release | Distributed by Public on 10/02/2024 08:21
Why do energy prices go up and down
Energy prices go up and down throughout the year and are impacted by various factors including global demand, the weather and geopolitical tensions.
In this article, we explain why energy prices fluctuate and why it is so important we reduce the country's reliance on fossil fuels.
What factors influence UK energy prices?
The UK doesn't produce all of its energy requirements, meaning we have to buy energy from international wholesale markets - a competitive marketplace where countries all over the world are competing for resources. Energy prices are influenced by many factors - including the weather, geopolitical instability and power plant outages.
Weather: When the weather is very cold or very hot, demand for energy increases to provide heating or cooling.
Although the UK had its coldest summer for nearly a decade, Europe and Asia had another record-breaking year of heatwaves, which is driving further competition for gas.
Geopolitical instability: Geopolitical tensions have a huge bearing on energy prices, as we saw in 2021 when Russia invaded Ukraine. Current conflicts in the Middle East are continuing to threaten supply chains and putting pressure on energy supplies from other international markets.
Power plant outages: Rising temperatures are also putting power stations at risk. Some nuclear plants recently reduced their production due to safety concerns and restrictions from low-river levels or river temperatures being too high. Whether the outages are planned or unplanned, this has a bearing on the energy prices set in wholesale energy markets.
Reasons to be positive about the UK's energy future
The UK government recently announced a challenging ambition to make the UK's power 100% low carbon by 2030. Good Energy welcomes this ambition. Increasing the percentage of renewables in our energy system will reduce our reliance on gas, and crucially reduce periods where gas is setting a high price for electricity.
Good Energy continues to support new small-scale renewable generation being built by offering renewable generators a vital route to market. The results of this are evident, between April 2022 - March 2023 an impressive 58% of the renewable generators we contracted with were new connections to the grid.
There have also been recent positive developments from the latest Contracts for Difference announcement, with the UK government announcing that a record 131 clean energy projects have been awarded funding in the latest auction - which will support reducing energy prices and emissions in the long-term.
Finally, the UK government recently announced the reversal of the ban on onshore wind. This is great because onshore wind is proven to be one of the cheapest ways of generating power.
All of this new renewable energy capacity will make the UK more energy-secure, cut our carbon emissions and crucially reduce our reliance on volatile international wholesale energy markets.
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