Weekly Energy Report - UK Power Curve Driven Down
For an update on the weekly changes in the energy market, read the Haven Power market report. Here’s what happened over the last 7 days, starting 28th January:
- Germany’s plans to phase out coal generation by 2038 pushed carbon contracts downwards
- Increasing Liquefied Natural Gas (LNG) imports helped drive losses on some gas contracts
- Similar demand on two separate days saw wind’s contribution ranging from 4.4% to 14.5%
- Concerns over major European cold snap eased following milder forecasts
Day-ahead prices averaged £58.47/MWh over a week with mostly high levels of wind output and cold temperatures.
Baseload power for delivery on 30th January was the highest price for the week at £67.83/MWh. This strong gain, in an otherwise bearish week of falling prices, was due to a significant drop in wind generation leading to an increase in the demand for gas.
The lowest price for day-ahead baseload power delivery was for 3rd February, when the forecast was for wind output to increase to 7.3GW and power demand to drop to 36.1GW.
During week 5, settlement period 15 (07:00-07:30) on 28th January and settlement period 16 (07:30-08:00) on 31st January shared the highest imbalance price of £140/MWh. On both days, the colder weather during these early periods increased the cost of actions available to National Grid.
A price of -£50/MWh was the lowest of the week, for settlement period 42 (20:30-21:00) on 29th January. During this time, wind generation picked up as demand decreased for the evening.
Renewables and other
There was a strong start to week 5 for wind generation, before a significant dip occurred on January 30th and 31st. Then, heading into the weekend, generation began to increase again - reaching the highs seen earlier in the week. These fluctuations had significant influence over the day-ahead and system prices.
Demand peaked at 48.9GW on 30th January, with wind generation contributing 2.2GW (4.4% of the generation mix). Interestingly, a similar level of demand (48.8GW) on January 28th saw the wind contributing 14.5% to the generation stack.
Secure and promote* (Seasons +1, +2, +3, +4) baseload contracts lost on average £0.82/MWh over week 5, as the downward trend continued.
Germany’s announcement of plans to phase out coal and lignite generation completely by 2038 saw carbon contracts trade down for most of the week. The carbon-intensive nature of coal generation provided further downward pressure on the already bearish gas market. Stocks of Liquefied Natural Gas (LNG) stocks reached a multiyear high, due to increased imports amidst falling Asian demand bolstering a well-supplied system. The easing of concerns about the impact of a major cold snap also reinforced the weakness of the National Balancing Point (NBP) for gas.
*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 19 and Winter 19.
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 blog.
Report written by Thomas Stebbings and Ben Symonds, Haven Power’s Portfolio Analysts. To speak to them, or the rest of our Flex & Portfolio Management team’s analysts, call 01473 707755 quoting reference HP250.
Although we’ve made all reasonable effort to verify the information in this report and provide the highest possible accuracy, Haven Power Limited gives no warranty - express or implied - in respect of this information. Furthermore, our provision of this report does not constitute advice of any kind and readers should not take it as the basis for any commercial or financial decisions. You should make any such decision based on your own records, knowledge and perception of power market data, supplemented with appropriate independent expert advice when required.