Weekly Energy Report - Solar up as carbon forces curve down
26th February 2019
For your update on weekly changes in the energy market, read the Haven Power market report. Here’s what happened over the last 7 days, starting Monday 18th February:
- Carbon value was at its lowest since early November.
- Renewable generation was variable, although temperatures were above seasonal norms.
- Saturday’s wind and solar output reached almost 42% of national supply.
- Solar output rose during the week, suppressing demand over the weekend.
Over a week that saw high solar output and declining levels of wind generation, Day-ahead baseload power prices averaged £47.89/MWh.
Tuesday 19th February saw the highest price (£49.74/MWh) in week 8. National Grid data from the previous day showed that wind was forecast to range from 4.1 to 8.9 GW, with the lowest volume due to occur during the peak hours. Saturday 23rd February saw the lowest price for Day-ahead baseload power at £46.00/MWh.
With temperatures forecast to remain above seasonal norms, and the usual drop in consumption over the weekend occurring, the grid was low in demand. This fact, together with the high levels of wind and solar, pushed down the more expensive gas generation to around 20% of the generation mix by midday.
During week 8, settlement period 35 (17:00 – 17:30) on Tuesday 19th February had the highest imbalance price of £100/MWh. During this time, solar levels dropped quickly and national consumption increased sharply from the previous settlement period by 1.2GW. To meet this rise in demand, National Grid called upon pumped storage hydro (at Cruachan and Ffestiniog power stations) to increase generation to 1.4GW, until the wind levels picked up.
Settlement period 27 (13:00 – 13:30) on Sunday 24th February had the week’s lowest imbalance price at £10.25/MWh. During this period, national demand was slowly decreasing while solar levels remained high at 6.4GW; wind had increased to 4.1GW and was set to rise further.
Renewables and other
Week 8 was a varied week for renewable generation in the UK, with both declining wind and increasing solar levels.
Wind peaked at 12.9GW on Wednesday 20th February, when it accounted for 30.9% of the generation mix. This was a particularly strong day for wind, as it produced over 10GW throughout the whole day, despite the day-on-day trend decreasing. On the other hand, solar levels picked up during the week, with most days peaking over 5GW. Sunday 24th February recorded the highest level, at 6.4GW, when it was 18.2% of the generation mix.
Wind and solar together, as weather-dependant sources of generation, produced an impressive 41.9% of the national supply at one point on Saturday 23rd February, pushing gas down to 19.7%.
Over week 8, the secure and promote* (Seasons +1, +2, +3, +4) baseload contracts lost £0.76/MWh on average - yet another 7 days that continued the recent downwards trend.
The week began in this vein on Monday 18th February, although the gains on the European carbon market during Tuesday and Wednesday quickly wiped out the losses. The momentum then reversed, with a sharp drop in carbon pushing prices down on Thursday and Friday. The European Union Allowances (EUA) benchmark of December 19 dived throughout Thursday, dragging down commodity markets across Europe. By the close of the UK power, the value of carbon stood at €18.92 per tonne of carbon dioxide equivalent (/tC02e), almost 7% less than at the same time on Wednesday 20th February – the lowest level since early November.
Carbon looks likely to continue to dictate curve movements in the short term. In the event that tensions between Australia and China continue to escalate, carbon could face further downward pressure in the coming weeks. This follows reports that Australian coal had been blocked at a key port in north-eastern China.
*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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