The United Kingdom reached a record price of €1,159/MWh on January 22nd, between 18:00 and 19:00 hours. Meanwhile, in continental Europe, prices remained much lower, between €159 and €180/MWh. This phenomenon is not a coincidence, but a reflection of an energy system that is rigid, highly dependent on natural gas, and poorly connected to Europe.

The high energy cost in the UK has profound implications for its economy and competitiveness. Sofia Núñez Mier, engineer in the Technical Department of Project Development at Ansasol, shared her insights with Strategic Energy Europe, explaining that this scenario is a direct consequence of insufficient integration of the country’s energy infrastructure with Europe and a lack of efficient storage, which exacerbates price volatility.

Factors Behind the Record Prices

Natural gas dependency remains one of the key factors behind the high electricity costs in the UK. More than 40% of its electricity generation relies on this resource, the price of which has been impacted by recent energy crises. Unlike continental Europe, which has diversified its energy sources, the UK continues to heavily depend on this fossil fuel. Additionally, the lack of interconnections is another crucial issue. With a capacity limited to just 8.4 GW, the UK system is isolated from the benefits of an integrated electricity market. According to Núñez Mier, a disconnected system makes it difficult to take advantage of the benefits of a connected market.

Limited energy storage also contributes to high prices. The UK grid lacks advanced solutions to manage the variability of renewable energy, which forces the system to rely on more expensive options during peak demand periods. These structural limitations mean that UK consumers and businesses face significantly higher costs.

Europe as a Model of Integration and Flexibility

In contrast, continental Europe has worked to ensure competitive prices through a comprehensive strategy that includes strong interconnections, efficient energy storage, and flexibility policies. These initiatives allow European countries to share energy resources, optimizing supply and ensuring supply stability. Technologies like batteries and hydrogen have facilitated the management of renewable energy variability, while energy policies focus on efficiently balancing supply and demand.

The European model demonstrates how an integrated approach can provide sustainable and cost-effective solutions. This strategy has resulted in more competitive prices while promoting the transition to cleaner energy sources.

NESO Suspends Grid Connection Applications in Great Britain

The operator NESO announced that it would pause grid connection applications from January 29th until Ofgem makes a decision on connection reforms, with a deadline set for May 31st. The pause, described as “brief” and “transitional,” will not affect projects that are directly connected to the national transmission grid.

The growth in the connection queue, which increased from 565 GW to 750 GW in 2024, shows the pressure on the system. This increase includes an excess of short-duration storage projects, with 120 GW in the queue for 2030 and 275 GW for 2035. The proposed reforms, along with assessments of unfirm connections, aim to alleviate this pressure but create uncertainty for developers.

Outlook for 2025

In January 2025, the electricity price in the UK stood at £98.85/MWh, representing stabilization compared to previous peaks. However, factors such as gas price volatility and energy policies will continue to influence the landscape. Julio Del Pino, technical specialist at MIM Group, told Strategic Energy Europe, that to avoid extreme prices, it is crucial to implement capacity markets and long-term contracts, as well as regulate speculation in the electricity market. These measures would not only help stabilize prices but also provide greater certainty for consumers.

Key Technological Solutions and Mechanisms

Energy storage emerges as one of the main solutions to stabilize prices and ensure the sustainability of the electrical system. According to Del Pino, technologies such as smart grids, kinetic gravitational energy, and green hydrogen not only balance supply and demand but also drive the efficiency and sustainability of the system. Additionally, demand management and capacity markets are essential tools to mitigate price spikes by ensuring a balanced supply even during peak demand periods.

Benefits of an Interconnected European Grid

An interconnected grid between the European Union and the UK offers significant economic and strategic benefits. According to Núñez Mier and Del Pino, greater integration would optimize energy resources, maximizing the use of renewables and reducing dependence on external sources. Furthermore, this interconnection would foster price stability by increasing competition and diversifying available energy sources. Energy security would also be strengthened by ensuring a resilient supply against disruptions and fluctuations in the markets.

The development of disruptive technologies is essential for advancing toward an effective energy transition. Del Pino emphasizes that investment in innovation, along with efficient resource management and adaptation of European laws, are crucial steps to meet the goals of the 2030 Agenda. Both Sofia Núñez Mier and Julio Del Pino agree that greater collaboration between countries is key to ensuring a sustainable, competitive, and resilient energy system. The case of the United Kingdom presents a clear lesson: only an integrated and flexible approach can address the challenges of the global energy future.