Cheaper renewables pushing out electricity generation from expensive gas in Q1 2022

New Government statistics [1] on UK energy trends in quarter 1 of 2022 show that the shortfall in gas generation is being filled by cheaper renewables, namely wind and solar, which have increased their share of electricity generation on the same quarter last year.

Commenting on the statistics, Jess Ralston, Senior Analyst at the Energy and Climate Intelligence Unit (ECIU), said: “For every megawatt of renewable power this winter, that's basically a megawatt less of gas power we have to source and pay for.

“This trend is only set to continue with recently commissioned wind projects four times cheaper than current gas and new farms coming online every year. This will protect us from gas price shocks in the long term particularly as the North Sea is a declining basin and fracking is so unpopular with voters.”

Source: Energy Trends, BEIS. https://www.gov.uk/government/statistics/electricity-section-5-energy-trends

Gas prices are currently six times more expensive than last year [2], adding at least £2,000 to the average household’s annual bill this year [3]. Offshore wind projects online today are over three times cheaper than current gas generation, and the latest round of renewables auctions saw prices that are around five times less than the gas price during the gas crisis. [4]

ENDS

Notes to editors:

1. Energy Trends, BEIS. https://www.gov.uk/government/statistics/electricity-section-5-energy-trends. Shows change in electricity generated, by fuel used, in Q1 2022 versus Q1 2021:

- Coal +3%

- Gas -14%

- Wind +15%

- Solar +2-%

Meaning total shares in Q1 2022 versus Q1 2021:

- Renewables +9%

- Fossil fuels -13%

- With nuclear included, the share of low carbon generation was +13%

1. Wholesale gas prices are 6x the level they were at the same time last year. https://news.sky.com/story/cost-of-living-energy-price-cap-expected-to-double-in-january-experts-say-12660095

1. ECIU analysis showing soaring gas prices are adding £1,200 to gas bills and £700 to electricity bills, which could be higher now due to further increases in price of gas. https://eciu.net/media/press-releases/2022/gas-set-to-have-added-2-000-to-bills-when-price-cap-rises-again-this-winter

1. Contracts for Difference Allocation Round 2 and 4 results for offshore wind were £58 /MWh and £37 /MWh in 2012 prices, respectively, against a conservative assumption of current gas prices being £240 / MWh on average during the gas crisis. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/643560/CFD_allocation_round_2_outcome_FINAL.pdf and https://www.gov.uk/government/publications/contracts-for-difference-cfd-allocation-round-4-results

For more information:

George Smeeton, Head of Communications, ECIU, Tel: 07894 571 153, email: george.smeeton@eciu.net