Britain’s electricity system is changing fast, and the latest quarterly data points to a market where resilience, grid access and flexibility matter as much as new generation.
The first quarter of 2026 showed why investors should keep a close watch on the link between gas prices and power prices. The Iran war pushed global energy markets higher, with UK gas prices doubling in two weeks before falling back. Electricity prices rose by around 20% between February and March, but strong renewable output helped limit the increase. That matters because it shows clean generation is already reducing some exposure to fossil fuel volatility, even though gas still plays a major role in setting prices.
The Government is trying to reduce the link between gas and electricity prices by moving older wind and solar projects onto voluntary fixed-price contracts. Assets that do not take part could face a windfall tax when prices are high. This may create more predictable income for some operators, but it also changes the risk profile for older renewable assets that have benefited from periods of high wholesale prices.
The bigger opportunity is in the build-out needed for Clean Power 2030. The report says that roughly tripling wind and solar capacity by 2030, if supported by flexible generation and storage, could avoid about 11 TWh of gas being burned for electricity each month. Gas would still be needed for around 5% of electricity in 2030, but mainly as flexible backup rather than regular generation.
The UK wants at least 6 GW of AI-capable data centres by 2030, but the grid is already a constraint. Around 140 data centre proposals are seeking about 50 GW of grid connections, equal to Britain’s peak demand. Some projects face waits of up to 15 years for access. This creates risk for poorly located developments, but opportunity for projects near strong grid connections, clean power sources and regions targeted for AI Growth Zones.
Drax Group plc (LON:DRX), trading as Drax, is a power generation business. The principal downstream enterprises are based in the UK and include Drax Power Limited, which runs the biomass fuelled Drax power station, near Selby in North Yorkshire.
