Power prices are expected to remain high for the rest of 2023, energy market analysis reveals.
This is mainly due to the high cost of gas, as Europe continues to rely on volatile international LNG to replace the lower-cost Russian gas. However, experts from Cornwall Insight are remaining "cautiously optimistic" about the future, saying that while our energy bills may not drop below pre-pandemic levels throughout the decade and potentially beyond, there is a notable shift towards more affordable pricing.
Cornwall Insight Senior Consultant Ruth Young said: “Despite raised predictions, we are cautiously optimistic that the worst of the energy crisis is behind us and it is unlikely that the exceptional prices witnessed over the past two years will make a comeback in the next decade and likely beyond. However, the energy crisis has taught us the importance of not taking prices for granted."
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Prices are expected to stabilise at a significantly lower level than the current rates, according to the consultancy, at around €100/MWh from 2027 up until 2030. This will be mainly thanks to renewable energy replacing expensive coal and oil-fired power plants, as well as the completion of the North-South interconnector which is set to make the network more efficient.
However, the expectation that long-term energy prices will remain significantly higher than pre-pandemic levels is a cause for concern. Ms Yound said: "The rise in our long-term forecast is still a worry. The electrification of the economy in Ireland was always going to raise demand and with it prices.
"However, since our previous forecasts, concerns regarding lower energy capacity on the continent have increased. Due to a rise in export requirements and limited import capabilities, prices are expected to remain significantly higher than pre-pandemic levels."
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