Electricity prices (Day-ahead, baseload contracts): At-a-glance summary
Electricity wholesale prices in GB over the past decade have largely been driven by changes in the gas price. This is because gas-fired generation is often the marginal source of supply and hence sets the electricity price. Changes in carbon prices have also influenced electricity prices in recent years.
Relevance and further information
Day-ahead prices are a good indicator of the short-term price of electricity in GB. However, Day-ahead prices are just one measure of the price of electricity. Suppliers will often buy most of their electricity months or even years in advance of when it will be delivered, so Day-ahead prices may not necessarily reflect the price that suppliers will have paid for their electricity.
The ‘baseload’ rate refers to a contract for electricity that is produced continually throughout the day and is distinct from ‘peak rates’ when electricity is bought/sold for consumption at peak times (7am to 7pm).