The surge stemmed from a drop in renewable energy production, impacted by high winter demand and periods of “dunkelflaute”—times of minimal wind and solar activity. Total domestic electricity demand hit 66.3 TWh, a 6% rise from Q4 2024 and the highest Q1 demand since 2022. Meanwhile, renewable generation fell to 34.1 TWh from 35.8 TWh in Q1 2024, with wind output at just 22.3 TWh—the lowest Q1 figure since 2020—due to reduced wind and biomass contributions.
Gas prices reflected these pressures, rising to £49.30 per megawatt hour (MWh) on February 10, the highest since March 2023, before easing as milder weather set in later in the quarter. Phil Hewitt, director at Montel Analytics, explained: “The elevated gas price levels were primarily driven by a cold winter, a fall in renewable generation caused by dunkelflaute conditions and confirmation of the cessation of Russian gas transit via Ukraine to Europe. This led to increased gas storage drawdowns, pushing storage levels below those seen a year ago.” He added: “The subsequent drop in prices was largely attributed to warmer weather which eased demand pressures.” The quarterly average gas price settled at £39.65/MWh, up 8% from £36.58/MWh in Q4 2024.
Higher gas prices lifted day-ahead wholesale electricity costs, with daily averages exceeding £160/MWh on some January days. During a cold snap on January 8, low renewables and peak demand prompted the National Energy System Operator (NESO) to issue an Electricity Market Notice and a Capacity Market Notice, later canceled as gas power stepped in. That day, system prices spiked to £2,900/MWh—the highest since January 2022—while wholesale prices hit £300/MWh during peak hours.
Despite the renewable decline, they remained the leading power source, contributing 44% to Britain’s Q1 fuel mix. Gas-fired generation accounted for 35%, up from 29% in Q1 2024, with nuclear at 12% and imports at 10%. Hewitt noted that milder weather later in the quarter reduced gas demand, potentially easing price pressures into Q2, though European gas storage ended Q1 below the decade’s average, and global uncertainties could still influence future trends.
