Weekly Energy Report - Gas movements see bulls return
Track the weekly changes in the energy market with the Haven Power market report, starting with this analysis of the 7 days since Monday 1st April:
- The most bullish week of the year saw price gains, on average, of £4.39/MWh
- Norwegian gas supplies dropped sharply; National Balancing Point (NBP) gas prices rose
- National Grid used hydro-electric power to balance the system in three consecutive periods
- Renewable generation experienced a mild week
Read more below:
Day-ahead baseload power prices averaged £42.35/MWh during week 14, £0.50/MWh up on the previous week.
The highest price for day-ahead baseload power was £47.15/MWh on Sunday 7 April. There was a strong link between this price and the sharp drop in the Norwegian gas supply to Britain, which fell about 70%. It went from 64mcm/day (millions of cubic metres per day) on Thursday evening (4 April) to 18mcm/day on Friday morning (5 April). This fall, combined with cooler weather conditions, pushed the day-ahead price upwards.
Thursday 4 April saw the week’s lowest price (£39.25/MWh) for day-ahead baseload power. This was due to the forecast for wind production to outturn above the level of Wednesday 3 April and squeeze gas fired production out of the generation stack.
Settlement periods 38, 39 and 40 (18:30 – 20:00) on Friday 5 April all saw the week’s highest imbalance price of £83.50/MWh. In the settlement periods before the earliest of this trio, solar and wind combined had dropped from 9.5GW to 7.3GW. With gas fired generation already ramping up by 500MW, National Grid called pumped storage hydro into action. The final price was set by accepting offers from Sloy Hydroelectric Power Station to increase its generation.
Settlement period 45 (22:00 – 22:30) on Tuesday 2 April, plus periods 4 (01:30 – 02:00) and 11 (05:30 – 06:00) on Wednesday 3 April all shared the week’s lowest imbalance price: £17.50/MWh. In all three periods, wind generation had picked up, reducing demand for the typically more expensive gas generation. The final prices were set by accepted bids from Peterhead Power Station to reduce its gas fired generation.
Renewables and other
The UK saw mild levels of renewable generation during week 14, with both solar and wind having one stand out day of performance.
Wind generation averaged 6.3GW during the week, up 1.2GW from the previous week. It peaked at 12.1GW on Thursday 4 April, when contributing the equivalent of 31.2% of UK electricity demand. Solar peaked at 8.1 GW on Monday 1 April, when it was generating 19.9% of the UK’s generation stack.
Together, these weather dependant sources of technology peaked at 15.4GW on Monday 1 April when generating a combined 37.1% of the UK’s demand.
Secure and promote* (Seasons +1, +2, +3, +4) baseload contracts gained on average £4.39/MWh during week 14, making it the most bullish week of 2019 so far.
Gas was the primary driver of this upward price trend, right from the start of the week. This was when the National Balancing Point (NBP) gas and European coal curves pushed the later-dated power products down. With a high number of Liquefied Natural Gas (LNG) shipments coming in, and withdrawal from storage sites continuing, Tuesday 2 April saw British natural gas NBP products sliding down in price. By the end of Tuesday 2 April, the Intercontinental Exchange (ICE) Rotterdam coal front year was also down $1.20/tonne compared to the previous day’s close.
Wednesday 3 April reversed the momentum of the opening two days of the week, with the NBP gas curve and European coal forwards ticking upwards. On Thursday 4 April, the curve recorded bullish movement, primarily from the European carbon market pushing later-dated power products higher. Carbon gained €1.17/tCO2e (tonnes per carbon dioxide equivalent) compared to the settlement on Wednesday 3 April; the NBP gas curve, Brent Crude Oil futures and European coal forwards all saw further gains too. The week ended on Friday 5 April with the bullish pressure of the Norwegian gas supply to the UK bleeding into curve products. In addition, European coal forwards trading on the ICE exchange showed strength, with the Rotterdam coal futures gaining $2/tonne above the settlement on Thursday 4 April.
*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.
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