Electricity prices: Day-ahead baseload contracts – monthly average (GB)

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 and continue to influence electricity prices in recent years. In 2020, a reduction in demand due to Covid-19 pushed down prices, although prices started to recover mid-year due to high demand and then colder weather in winter. Also, carbon prices reached new highs nearing the end of 2020 which also influenced power prices. In January 2021, power prices spiked to an all-time high due to a combination of low renewable generation, below seasonal normal temperatures and tight system margins. However, in February prices fell as there was more renewable generation on the system and margins were less tight.

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).