Introduction
It has been a mixed quarter for wind power. On the one hand, the UK’s wind fleet reached 29 GW of installed capacity, becoming the largest capacity of any type of power station. Britain joins the ranks of only five countries with wind capacity in the top spot, so this marks an important milestone on the route to net zero. On the other hand, Vattenfall caused shockwaves through the industry by suspending its 1.4 GW project off the coast of Norfolk due to escalating costs. This raises questions over the future of other offshore farms which committed to sell their output for just £37.50 per MWh back in 2022, as the recent increase in material and labour costs affect the whole sector.
In good news for the environment, electricity production from fossil fuels fell to its lowest level since the COVID pandemic brought the nation to a standstill. Carbon emissions also hit a 3-year low, falling below 150 g/kWh in May for only the second month in history. In good news for consumers, power prices have fallen by 40% over the past year, averaging below £80/MWh in May – the lowest in two years. April 10th saw negative power prices for most of the day due to an abundance of wind and solar generation. It was the first day where the daily-average price was less than £0 in nearly three years.
It is not just power prices that have come down, the price of carbon emissions has also fallen by a third over the last three months. Whereas in the past the UK carbon price moved in sync with the European price, the link between the two has now broken, implying that traders believe the UK’s targets will be significantly easier to achieve than those set by the EU, and making power exports from Britain to the continent more attractive.
