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Insight

Home/2020 and beyond: Insight from COVID-19 and Aurora’s long-term outlook for the GB power and European gas markets

2020 and beyond: Insight from COVID-19 and Aurora’s long-term outlook for the GB power and European gas markets

The report was first presented during a Group Meeting in June 2020 and was subsequently updated to reflect feedback provided by clients.

Key messages to emerge from the analysis are:

  1. As a consequence of COVID-19, the GB Power Market observed recent historic lows in gas prices, demand and power prices. Aurora Central forecasts that a full recovery would take place by 2025. The outbreak has also provided insights into potential system outcomes in a high renewables world​
  2. Aurora Central forecasts a significant growth of renewables through a combination of merchant solar and onshore wind assets coupled with CfD-backed offshore wind. Despite this, power prices are expected to rise to an annual average of £63/MWh in the 2030s due to higher demand, gas and carbon prices
  3. Driven by the uptake of electric vehicles and heat, annual power demand is expected to increase by 42% to 431 TWh by 2050. Further policy incentives will be required to encourage the uptake of heat. Reforms to VAT structures for heat or imposing a carbon price on domestic gas are likely to be most successful, increasing the uptake of electric heating units by more than 50% in 2035
  4. Smart electric vehicles will lower baseload prices and spreads but improve renewables economics. On the other hand, the impact of smart heat is limited due to a relatively more rigid consumer preferences for heat at certain times in the day

The report can be downloaded in PDF from the download section of EOS.

If you would like to discuss any of the findings, please get in touch.

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