UK energy prices rank among the highest in the world, and the invasion of Ukraine and the US-Israeli war with Iran have pushed them higher still. For investors in UK-listed renewables and infrastructure companies, Gravis Capital Management argues that it is a double-edged inheritance. Strong prices support revenue. They also drag in the politics.
Prices are down from the peak but nowhere near normal
Manufacturing electricity averaged 16.68p/kWh in the final quarter of 2025, only modestly lower year-on-year and well above pre-crisis levels. The Ofgem cap for a typical dual-fuel household runs at £1,641 a year from April, roughly 7% below the previous quarter but still elevated. Cornwall Insight expects it to climb towards £1,929 in July, softened only by lower summer demand.
Who actually gains from strong prices
The retail and wholesale figures are not what generators receive, and exposure varies. Assets on Contracts for Difference or fixed contracts trade upside for stability. Merchant-exposed assets capture the highs and wear the lows. Greencoat UK Wind, held in the TM Gravis Clean Energy Income Fund, keeps material spot exposure and so captures near-term Middle East price pressure directly. Should the Strait of Hormuz stay constrained, several holdings could lock in higher prices for future periods.
The tailwind carries a political tax
Because energy costs feed inflation, they shape interest rate decisions. They also draw scrutiny. When bills spike, governments revisit how these assets are paid, through retroactive scheme changes and windfall levies. That fear widens discounts to net asset value even when assets perform, lifts the cost of capital, and slows deals until frameworks clear.
The grid build-out is the durable opportunity
High prices have sharpened focus on the system itself. Ofgem's RIIO-3 price control unlocks £28 billion of grid investment, adding about £66 a year to network charges now but cutting bills by an estimated £50 by 2031. For companies in networks, storage and flexibility, that is a long capex pipeline. Regulated asset base models deliver inflation-linked cashflows insulated from power-price swings, while batteries profit from the volatility itself.
What it leaves investors holding
Many renewables and infrastructure companies still yield high single digits to mid-teens, a real premium over gilts, yet trade at wide discounts. GCP Infrastructure Investments (LSE:GCP) shows the mechanics: over the year to 31 March 2026, power prices moved NAV by just -0.22%, while the RPI-to-CPI subsidy switch cost -0.36%. Elevated prices reinforce the structural case for renewables and the grid to carry them.
The revenue is real. So is the scrutiny. Pricing both correctly is the whole job.
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