The Government will legislate to remove Carbon Price Support (CPS) with effect from April 2028, a change that will lower the carbon component of wholesale electricity prices when gas and other fossil generators set the marginal price.
CPS sits alongside the UK Emissions Trading Scheme and currently tops up the UK ETS price by £18/tonne of CO2. Greencoat’s Investment Manager had already modelled a material reduction in CPS over time as renewable capacity grows; yesterday’s announcement brings that outcome forward.
Initial analysis from the Investment Manager indicates electricity prices used in the company’s NAV could fall by approximately £4–5/MWh from April 2028 to the early 2030s, and by £2–3/MWh thereafter. "could reduce the Company's NAV by 3 - 5 pence per share," said Greencoat UK Wind (LSE:UKW).
The company said it will publish further detail in its Q1 factsheet, expected on 27 April.
