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RAE briefing - Moody's Electricty Price Forecast

Q3 2014

On the 2nd July 2014, Moody’s Investors service released a report predicting that declining demand, weaker prices for gas and the roll-out of offshore wind will keep wholesale electricity prices in the UK close to current levels through to 2020.

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On the 2nd July 2014, Moody’s Investors service released a report predicting that declining demand, weaker prices for gas and the roll-out of offshore wind will keep wholesale electricity prices in the UK close to current levels through to 2020.

Scott Philips, Moody’s Vice President and Senior Analyst said “we believe that widely expected tightness will be short lived as energy efficiency gains, the roll out of offshore wind power and the return of mothballed gas plants will keep prices in check.

Our view is that power prices will stay around current levels, or GBP48-53/MWh, through to the end of the decade.” Moody’s further noted that rising energy bills amongst consumers, ongoing debates about the cost of living in the UK and the forthcoming General Election will mean that the political and regulatory risk environment for utilities in the UK remains challenging.

Concurrently consultants Aurora Energy Research forecast that the power price would decline to £46/MWh in 2020 and warned on this basis that the Levy Control Framework (LCF) would be exhausted and thus fail to deliver on low carbon capacity targets. They feel the government’s decision to freeze the carbon tax combined.

View the full Moody's Electricty Price Forecast briefing.