We are pleased to present Aurora’s new strategic insight report, Back to the future: Review of Aurora’s long-term outlook for the GB power and European gas markets. The report presents our reflections on our past predictions and forecasting performance, highlighting the key drivers of value change between our forecasts and the sensitivity of our central outlook to key uncertainties.
The analysis draws upon our market experience, with much of the content developed through a detailed consultation process across market participants. The report was first presented during a Group Meeting in May 2019 and was subsequently updated to reflect feedback provided by clients.
Key messages to emerge from the analysis are:
1. Expected increase in upstream oil and gas costs coupled with a tightening of the global gas market results in gas prices increasing to an average of 75p/therm post 2025
2. Investment into the GB power market will continue to be dominated by renewables plus flexible generation, with 71 GW wind and solar capacity on the system by 2040
3. Despite rising commodity prices, the build out of renewables and nuclear will result in baseload power prices plateauing at an annual average of £62/MWh in the 2030s
4. Merchant renewables are most susceptible to market changes; total renewables capacity could decrease by 20 GW relative to Aurora Central if gas prices fail to recover from current levels
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