The UK held a record breaking renewables auction on 7 July 2022, securing 11 GW of clean energy at the lowest wind and solar prices seen so far1. The result was reported by Ember, an independent energy think tank, in analysis published on 19 July 20221.
The auction took place against a sharp rise in wholesale electricity costs. Ember's analysis found that the price of fossil gas was responsible for 80% of the increase in UK wholesale electricity prices between July 2021 and June 20221. Monthly average wholesale prices rose by almost £120/MWh over that period, from £55/MWh to £171/MWh, with gas accounting for £93/MWh of the increase1. Over the same period, the cost of generating electricity from a combined cycle gas plant rose from £48/MWh in December 2020 to £227/MWh in December 20211. Ember states that the UK generated 40% of its electricity from gas plants in 20211.
"Whilst the cost of fossil fuels continues to skyrocket, the UK held a record breaking renewables auction on 7 July, which secured 11 GW of clean energy at the lowest wind and solar prices seen so far."
The auction outcome and the wholesale price figures describe two different parts of the same market. The auction sets the prices paid to new renewable generators under long term contracts, while the wholesale figures describe what electricity cost to buy in the short term over the preceding year1. Ember's analysis attributes the wholesale increase to gas rather than to green subsidies or the price of carbon allowances, a claim it says has been made by a small group of Conservative MPs in the Net Zero Scrutiny Group1.
Why it matters for households
Wholesale electricity prices feed through to household bills with a lag, and Ember notes that further pressure was expected in October 2022 when the energy price cap was due to rise again1. The distinction between contract prices for new renewable capacity and short term wholesale prices matters for a home's energy independence: capacity secured at low fixed prices is insulated from the gas market, whereas the wholesale price a household pays is currently set largely by gas1. Ember's position is that every new domestic wind and solar project lowers electricity prices and reduces exposure to volatile global gas prices1. The market-data hub carries the published figures behind these movements, including UK domestic energy prices over time and how UK domestic energy prices compare with Europe. The policy framework that governs auctions and price caps sits under the regulation-policy hub.
What happens next
Ember states that the energy price cap was due to increase again in October 20221. No further dated steps are given in the source. The auction's full results, including the strike prices awarded by technology, have not been reported here.