Electricity in the U.K. is poised to cost almost twice as much as in Germany within two years as Britain lags behind in building solar and wind plants.
U.K. power will be 85 percent more expensive than in Europe’s biggest energy market in May 2015, according to data compiled by Bloomberg. That compares with an average premium of 17 percent over the past five years and 80 percent today, data from Marex Spectron Group Ltd., a broker in London, show.
While Germany is seeking to consolidate its status as Europe’s biggest producer of wind and solar power by boosting its share of renewables-sourced energy to 35 percent in 2015 from 22 percent last year, the U.K. is targeting 15 percent from 11 percent over the same period. Statkraft AS is closing money-losing gas-fed plants in Germany, while Macquarie Group Ltd. (MQG) and Vitol SA are buying British power stations, betting on gains of as much as 19 percent in U.K. prices by 2016, according to Societe Generale SA.
“The U.K. has built significantly less renewables to date,” Ilesh Patel, a partner at Baringa Partners LLP, a consulting firm that counts EON SE and Electricite de France SA (EDF) among its clients, said in a phone interview from London. “Germany has been on a fast-track wind and solar plan.”
U.K. power will cost 53.16 pounds ($83.12) a megawatt-hour in May 2015, compared with 33.21 euros ($44.21) in Germany, according to fair value calculations on Bloomberg as of 12:47 p.m. in London. The British premium has averaged 8.51 euros over the past five years, 21.49 in 2013 and was at 24.48 euros today, Marex Spectron data show.
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