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As renewables grow, cleaner electricity is increasingly linked with lower prices. Regen’s GB Grid PriceXCarbon tracker helps make that relationship visible – while showing why cheaper green power does not automatically translate into lower bills for everyone.
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That’s the theory. In practice, the relationship between green energy and cheaper energy is messier. Electricity prices are shaped by gas markets, network costs, balancing costs, tariff design and the way the wholesale market is structured. Even when renewables are helping to push down wholesale prices, it may not be apparent to householders and businesses that this is happening.
But the signal is becoming clearer. As renewable generation increases, periods of lower carbon intensity are increasingly associated with lower wholesale and dynamic retail prices. To test this hypothesis, we built the GB Grid PriceXCarbon tracker to make the relationship between energy price and carbon intensity easier to see – and to show why market reform, grid investment and flexibility will be crucial if the benefits of cheaper clean power are to reach more consumers.
Electricity prices are determined by a tangle of factors that go well beyond how much wind is blowing. Wholesale prices, transmission charges, distribution costs, balancing costs, Capacity Market payments, renewable obligations, contracts for difference, etc. In explaining how its Agile tariff works, Octopus Energy lists at least eight distinct cost components that feed into a single half-hourly price. Even a tariff explicitly designed to track the market must still apply a multiplier to cover network charges, apply a peak-time premium and cap prices for customer protection.
We are certainly not the only ones trying to bring light to this trend through data visualisation. However, simple narratives about the price impact of renewables are difficult to produce – not because the relationship doesn't exist, but because the signal is buried in noise.
Recent analysis, from a variety of sources, is nevertheless pointing in a clear direction. When renewables are high there is a downward pressure on wholesale prices. Ember has compared the cost of generating electricity from fossil fuels versus renewables against electricity and carbon prices. Wind power reduced the wholesale price of electricity in GB by up to 25% in 2024, equivalent to around £25/MWh. And analysis has shown that in countries where gas sets prices more frequently, wholesale prices are higher. This type of price shock has been felt strongly in Italy, which experienced average prices of €136/MWh in the first half of 2025, compared to just €62/MWh in Spain. It’s not hard to guess which one has higher renewables integration, and which sees gas sets the price more frequently.
The relationship between gas dependency and the impact of price shocks is crucial when access to fossil fuels becomes a matter of international security. Ember’s analysis shows that gas prices have increased by 42% since the start of the US-Israel war in Iran. That is bound to affect power prices, but periods of high solar and wind generation have so far helped to shield electricity consumers from the full impact of the gas price increase. This suggests that Great Britain has higher levels of resilience against external shocks compared to the Ukraine war energy crisis of 2021-23, at least in part because of a c. 15 GW increase in wind and solar capacity from 2021 to 2025, as well as an increase in storage and interconnection.
So, what is happening in the GB market? We are still heavily dependent on gas-fuelled generation and therefore susceptible to changes in gas prices. Under the marginal pricing system, the most expensive generator to clear in the day-ahead market sets the price for all generators in each trading period in that market. That’s true in the short-term market, but it overlooks the role that lower-cost renewables can play in forward markets and through the use of long-term Power Purchase Agreements as a hedge against volatile prices.
Even in the day-ahead market, when enough wind and solar are on the system, more expensive gas-fired plants drop out of the merit order. Although gas might remain the marginal-price-setting plant, with more renewables there is greater competition among power plants and less opportunity for price-gouging.
When renewable generation is very high, the impact can be even greater. The GB power market has seen more negative electricity prices in recent years, a trend that coincides with the rise of renewables in the energy mix and an increase in interconnector capacity. In Q2 2025, GB experienced 112 negative price hours, up from 106 hours in 2024.
Overall, wholesale electricity prices have increased less than they might have. That doesn’t mean we are immune to gas price shocks. There is still an underlying gas dependency, and we could still see power prices rise, especially if European gas reserves are low going into the coming winter.
There is a long way to get from lower wholesale electricity prices to lower retail tariff prices. Consumers on fixed-price or simple time-of-use tariffs might barely notice the immediate impact of sunnier, windier conditions. Octopus Agile is one of the new dynamic tariffs that responds to half-hourly wholesale prices and passes through a share of those changes to consumers. It therefore offers a partial window into the real-time relationship between the grid’s carbon intensity and electricity costs.
The Agile tariff reflects wholesale prices, but there isn’t a simple relationship between the tariff rate and wholesale price. Other factors must be considered. As Octopus states, the Agile pricing formula is approximately: min(D × W + P, 95), where W is the half-hourly wholesale cost of electricity, D is a distribution cost coefficient that varies by region (ranging from 2.00 in London to 2.40 in Northern Scotland), and P is a peak-time premium applied between 4pm and 7pm. There is also a price cap at £95 per MWh. The result is a retail tariff price that moves closely, if not quite in lockstep, with wholesale prices.
Octopus is clear that Agile pricing isn’t as directly tied to the ‘greenness’ of energy as it would like. However, low tariff price periods do generally coincide with high renewable energy generation.
To test how closely wholesale and retail prices correlate with carbon intensity (a proxy for the amount of renewables in the generation mix), Regen used Claude AI to create an open dashboard that pulls half-hourly Agile retail prices for all 14 GB DNO regions from the Octopus API, GB national carbon intensity data from the Carbon Intensity API, and GB wholesale day-ahead prices from Low Carbon Contracts. The dashboard computes the Pearson correlation coefficient between carbon intensity and electricity price across four time periods: the past day, week, month and year.
The results are striking. Over the past year, the carbon intensity coefficient (R2) explains approximately 32.3% of the variance in Agile retail prices. Wholesale prices are slightly more correlated. Analysis of the Market Reference Price index for variable generation used by the Low Carbon Contracts Company to calculate CfD payments shows that the carbon intensity coefficient explains 36.7% of the variance in wholesale prices. Put simply: when the grid is cleaner, both wholesale and Agile prices are generally lower. The scatter plot shows a clear positive gradient: as carbon intensity rises (i.e. more fossil fuels on the system), prices rise too. When renewables dominate and carbon intensity is low, prices fall (sometimes to zero or below).
The wholesale market index shows an even stronger correlation, which makes sense: Octopus Agile prices are derived from wholesale prices with additional fixed cost components layered on top, so the underlying signal is somewhat diluted by the time it reaches the retail price. But the direction is unambiguous in both series.
A few caveats and limitations are worth noting. Clearly, correlation does not equal causation. The relationship is not perfectly linear; there are periods of high renewable generation with stubbornly high prices (particularly when interconnector flows or gas peaking plant dynamics intervene), and periods of low carbon intensity that don’t produce especially cheap electricity. The Agile formula also includes a regional distribution multiplier to reflect network costs, which means that prices vary across GB even when the carbon signal is identical.
Agile is a targeted product. Many households cannot or do not want to shift consumption based on half-hourly price signals. The benefits are most accessible to those with flexible demand (electric vehicle chargers, heat pumps, hot water cylinders, home batteries) which skews uptake towards wealthier households with newer technologies.
As the GB grid approaches the government’s CP30 clean power target, the proportion of zero-marginal-cost generation will increase. The periods of very low or negative wholesale prices will become more frequent, and the correlation between carbon intensity and price will likely strengthen. On the other hand, simply adding more and more renewable capacity without investing in the grid and the electrification of demand will have diminishing benefits and could begin to push up system costs.
The challenge for policymakers is to get the balance right and to ensure that the benefits are felt by more than just the early adopters of flexible tariffs.
We’re developing our data visualisation and the Regen Data Portal to bring greater insight to the sector. If you’d like to inquire about our digital tools, data analysis capabilities or services we offer to clients, please reach out to Ray Arrell.
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