Ever since Britain had an electricity market, power prices have followed demand. High during the day when people are working, low overnight when they sleep. This summer, that logic has turned on its head, as supply of renewable electricity
becomes a bigger factor than demand.
The Economy 7 tariff was introduced back in 1978, giving households lower prices for power consumed overnight. This encouraged people to shift their consumption, especially with night storage heaters, to make sure there was sufficient demand to keep the expanding new fleet of nuclear reactors running 24/7.
Fast forward to 2025 and this pricing pattern has turned on its head. Over the second quarter, daytime power prices were lower than those overnight for the first time ever. The rapid rise in solar PV over the last two years means the grid is being flooded with clean power on sunny afternoons, helped by the sunniest Spring on record with 40% more sunshine hours than average.
Solar pushes down the need for conventional generation during daylight hours, and with it, power prices. The boom is set to continue as small-scale solar costs tumble and English housebuilders must legally install solar panels on new homes by 2027. The UK’s latest solar roadmap seeks to more than double installed capacity to over 45 GW by 2030.
Britain’s solar PV capacity, with new installs each year.
Prices are not just going down, becoming more prone to spikes. Prices during the evening peak, once the sun is setting, are growing relative to average prices. Back in 2010, a mid-merit power station could expect to turn on at 7 am and run through till 10 pm when demand started falling. Now, a contingent of stations need to turn on at 7, and then either shut down or dial back their output to minimum at 9 am once the sun is rising. Then they must ramp back up for just a couple of hours in the late evening.
Just as a gym membership becomes worse value for money if you only go twice a year, power stations must charge more if they operate less frequently. Fewer running hours mean that capital costs, insurance, and other fixed expenses need to be repaid from less output, while start-ups and running at minimum load are less efficient and so require more fuel, and induce more costly wear and tear.
California gives us a glimpse into the future. Their operator coined the term “duck curve” over a decade ago to describe declining midday demand and prices. Now the duck has flown the nest, as a huge build-out of batteries charges up on
midday sunshine to fill the morning and evening peaks. In many sunny regions, falling energy storage costs mean it is now possible to achieve nearly 90% continuous year-round solar power generation for around £75/MWh. If Britain is to tame its own duck curve, it will need rapid deployment of storage to soak up cheap midday solar and release it when it’s really needed.
The average daily profile of Britain’s wholesale power prices during the second quarter of each year from 2001 through to
2025, shown relative to the average price in the quarter.
