“As existing power plants become less reliable, particularly gas and nuclear, their running hours will decrease, and they will require higher prices in the Capacity Market to cover costs,” the analysts said.
New, cleaner technologies that could serve to meet demand, such as battery storage, are also currently more expensive.
“Additionally, uncertainty over the lifespan extension of certain nuclear plants and the operational start date of Hinkley Point C will contribute to keeping prices elevated.”
“While solutions like battery storage could meet some of the increasing power demand, they can be expensive, and generators need higher payouts to cover costs,” said Tom Faulkner, head of product development at Cornwall Insight.
“At the same time, refurbishing the ageing plants to continue to provide the power comes with its own costs – costs which ultimately land at the feet of consumers.”
Energy bills have spiralled following Russia’s war in Ukraine, which hit gas prices.
Under Ofgem’s price cap regime, average household bills are expected to fall around 7pc from July, bringing the typical energy bill paid by direct debit down to £1,568 per year.
However, Cornwall Insight expects prices could begin to climb again from October.