Renewables and nuclear will be the long-term winners of the introduction of a UK carbon price floor.
And the phase-out of coal and older gas plant could be accelerated by the floor price.
These are the claims of London consultants Redpoint Energy, which helped the Treasury and DECC with carbon price analysis.
After today’s Budget set a start date of 2013 for a £16 per tonne carbon price floor, Redpoint director Duncan Sinclair said: “We estimate that wholesale electricity prices may be around £5-£6/MWh or 10% higher by 2020 given the levels of carbon price floor announced today.
“This will have a significant impact on the earnings of power generators; with renewables and nuclear generators benefitting from the higher prices, while coal and older, less efficient gas plant will be hit by higher carbon costs, potentially accelerating closure.”