Energy prices to stay high for at last a decade, experts warn

·3-min read
File photo dated 15/10/21 of shoppers in the fruit and vegetables section of a branch of Sainsbury's in London. Food prices are rising at near-record levels as the cost-of-living crisis bites, according to new data. Issue date: Tuesday March 1, 2022.
Brits are seeing rising costs across the board as the cost of living crisis takes hold. (PA)

High energy prices in the UK are set to remain beyond 2030, experts have warned, amid the growing cost-of-living crisis.

Outgoings and costs of essentials have spiked in recent months with soaring energy bills, rising inflation, and tax hikes putting a growing amount of financial pressure on millions of households.

New modelling by energy market company Cornwall Insight estimates increased prices — driven in part by heightened global demand and the Ukraine war — will remain high until at least 2030 and are likely to remain beyond that, too.

Tom Edwards, senior modeller at Cornwall Insight said: “While we are used to seeing headlines depicting energy prices at an all-time high, unfortunately, while prices will reduce, our modelling shows that pre-2021 prices are not making a comeback this decade and likely beyond.

“Rising EU demand for non-Russian gas has pushed up gas prices across the world, and these higher prices have increased production costs for power, with gas set to remain the marginal fuel source for producing power throughout the remainder of the 2020s.

Read more: MP forced to send more than a thousand constituents to a single food bank

Cornwall Insight have predicted that while energy costs are likely to go down from current levels, they will not go back to prices seen before 1 April (Cornwall Insight)
Cornwall Insight have predicted that while energy costs are likely to go down from current levels, they will not go back to prices seen before 1 April. (Cornwall Insight)

"With all GB coal capacity due to close by April 2024 and many nuclear power stations coming to the end of their lives, high power prices will continue to feed through into consumer bills."

He added: "The next decade and beyond will see significant changes to the energy generation technology mix with renewables becoming more and more important.

"We must make sure that not only do we plan for long-term generation, but we work to design a wholesale market which supports investment in new low carbon capacity at the lowest possible cost to consumers."

High energy prices have helped drive soaring inflation, which reached a 30-year high of 7% in March.

This is likely to get even worse in the coming months as the full impact of higher bills and additional financial pressures placed on households in April - including the energy price cap increase, council tax rises and a national insurance (NI) hike - hits family finances.

The warnings come as a new survey found two-fifths of families with children at home were already struggling to pay their bills in early April.

Inflation chart
Inflation chart

Some 41% of households with children living at home said they had struggled with their bills while nearly two-fifths (39%) of families do not feel confident that they will be able to meet payments over the coming weeks, according to comparethemarket.com

Over a quarter (27%) of households without children also do not feel confident about their financial future, compared with 17% two years ago.

More than half (54%) of those surveyed are cutting back on eating out, while others are spending less on clothes (48%) and holidays (44%).

Data last week also revealed that, while regular weekly wages increased by 4% between December 2021 and February 2022, workers actually saw a real terms pay cut of 1% in the same period when adjusted for inflation.

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