Here’s a summary of the week starting 5th March:
Last week’s milder weather in the UK brought some normality back to Day-ahead baseload prices, which reached a high of £62.69/MWh, for Monday 5th March. A drop in wind generation during the middle of that day was the likely driver for this high. However, it’s also possible that prices were still feeling the effects of cold weather and high National Balancing Point (NBP) gas prices from the previous week.
Day-ahead prices fell over the course of the week to a low of £50.70/MWh for delivery on Saturday 10th March, when wind generation was at its highest for the week. Higher than usual solar generation last week may also have -played a part in lower Day-ahead prices. Coal-fired generation made up a decreasing part of the UK fuel mix last week; this is likely to have been another driver for the decline in Day-ahead value.
Single imbalance prices during week 10 averaged a much lower £55.11/MWh when compared to the previous week.
Prices for settlement period 2 (00:30-01:00) on 11th March were the highest for the week, reaching £160/MWh. During this period, National Grid once again called upon Dinorwig pumped storage hydro plant to generate to ease system stress. This settlement period coincided with a drop in wind generation to below 1GW of output, forcing National Grid to take action to fill the gap.
Also on 11th March, during settlement period 30 (14:30-15:00), single imbalance prices reached a low of £25/MWh. At this point, National Grid paid Peterhead Combined Cycle Gas Turbine (CCGT) not to generate, as the system operator believed the electricity system was in oversupply.
Renewable generation, in particular wind generation, fluctuated throughout week 10. Increasing wind output towards the end of the week reduced coal-fired generation in the UK’s fuel mix.
Solar generation featured more in week 10 than previous weeks, with output peaking at almost 5.5GW on 8th March. This solar output, along with 6.7GW of wind output, meant that renewables made up over 25% of the UK fuel mix: more than at any other time during the week. Solar output was greater than output from wind on a number of occasions last week, something we would expect to see more frequently as we move towards the warmer summer months.
Secure and Promote* (Season +1, +2, +3, +4) baseload contracts gained £1.28/MWh on average, as the UK wholesale market experienced generally bullish conditions again last week. Summer-18 hit a 3-year high and saw the most significant increases in value; closing £1.80/MWh higher on Friday compared to its opening value on Monday morning. The gains in the UK power curve resulted from the continued strength of NBP gas contracts. An element of risk premium, a hangover from price spikes seen during week 9, seems to be filtering through to UK seasonal products. Friday’s trading sessions saw stronger upward movements on the front two seasons, with strength on the Brent Crude oil benchmark the likely driver. Another factor may have been the announcement that US President Donald Trump is due to meet North Korea’s leader Kim Jong Un. This certainly strengthened Asian stock markets.
*For more information about Secure and Promote, please consult this Ofgem web page.
The annual power graph shows how the value of an annual power contract changes over time. The annual contract value is the average of the front two seasons, currently Summer 18 and Winter 18.
To help you make sense of the industry, you can also use our jargon buster and handy guide to Third Party Costs (currently 60% of your bill). And for interesting articles and useful insights, look out for our blogs.
Report written by Thomas Stebbings and Andrew Jarman, Haven Power’s Portfolio Analysts. To speak to them, or the rest of our Flex & Portfolio Management team’s analysts, on 01473 707755 quoting reference HP250.
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