Weekly Energy Report - Gains for secure and promote contracts
27th June 2019
Haven Power’s market report updates on the energy market’s weekly changes. Here’s what happened over the past 7 days, starting Monday 17th June:
- Secure and promote contracts continued the price fluctuation of the last 6 weeks.
- Imbalance price remained positive as pumped storage hydro continued to set highest prices.
- Variable wind and solar reached a peak of 44.8% of UK generation.
- Day-ahead prices ticked down due to National Balancing Point (NBP) prompt prices falling.
Read more below:
Day-ahead prices in week 25 averaged £39.36/MWh, which was down £0.13/MWh from week 24. At the start of week 25, day-ahead prices rose due to the strength of National Balancing Point (NBP) gas. This was caused by a reduction in the amount of Liquefied Natural Gas (LNG) sent to gas grids across north-west Europe. A prediction of low renewable output, particularly wind, helped support prices.
Day-ahead baseload prices peaked on Wednesday 19th June at £43.25/MWh. These prices slid later in the week, as renewables generation increased and the NBP gas price dropped. Prices reached a low for the week of £37.21/MWh on Friday 21st June.
The highest imbalance price of week 25 was during settlement period 35 (17:00 – 17:30) on Thursday 20th June. The system price reached a high of £92.25/MWh, set by offers accepted from Foyers Power station, a pumped storage hydroelectric plant by Loch Ness.
The week’s lowest imbalance price of £0.04/MWh was during settlement period 19 (9:00 – 9:30) on Tuesday 18th June. This price was set by accepted prices from several generators, including the West Burton Combined Cycle Gas Turbine (CCGT) plant and Strathy North Wind Farm.
Renewables and other
Renewable generation was inconsistent over week 25, but made a strong start on Monday 17th June. Wind and solar were producing 15.8GW, equivalent to 44.8% of the UK’s generation. This also coincided with wind’s peak, at which point it was producing a maximum of 10.4GW. Wind and solar generation decreased over Tuesday 18th and Wednesday 19th June before stabilising slightly for the remainder of the week.
Early in the morning of Saturday 29th June, wind reached a low of less than 2GW. It produced an average of 4.4GW over the week, which was down on the average for week 24. After starting the week with a lower output, solar production ramped up to a high of 7.7GW on Saturday.
Secure and promote* (Seasons +1, +2, +3, +4) baseload contracts gained an average of £0.67/MWh during week 25, in contrast to the 1.22/MWh loss seen in week 24. This continues the pattern of alternating average gains and losses seen over the last 6 weeks in these contracts.
On Monday 17th June, the prices of these contracts were mostly left unchanged due to limited moves in gas, coal and carbon futures. However, during the middle of the week, these seasons saw losses due to a downturn (bearishness) in the National Balancing Point (NBP) gas equivalent. This broke the low set on Thursday 6th June.
Over Thursday 20th and Friday 21st June, the seasonal contracts’ gains were mainly due to upward movement (bullishness) on front-season NBP gas. To a lesser extent, gains in Brent Crude Oil and coal also pushed prices up. Carbon futures also firmed up over the course of the week, providing support to longer dated UK power prices.
*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 winter 19 and summer 20.
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.
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