The day to day price of electricity on the UK’s wholesale markets driven by the cost of producing electricity and confidence that supply can meet demand.
The cost of production
Generators need to sell the electricity they produce at a price that covers their operating costs. Different generators have different costs. So, the changing mix of generation sources (gas, coal, nuclear, wind, solar etc) that make up the UK’s electricity supply greatly influences the prevailing wholesale market rate. Fuel costs are a far higher share of operating costs for power stations that burn coal and gas than for nuclear or renewable generators. That’s why the price of coal and gas has a direct influence on the cost of electricity. The cost of these fuels is in turn influenced by other markets such as oil (to which gas is directly linked) and foreign exchange rates as the UK imports a good deal of the gas and coal it needs.