Weekly Energy Report - UK wind output reaches 3-month high
Need to discover what’s happened in the energy market each week? Get Haven Power’s market report for a summary just like this one, covering the past 7 days from Monday 1st July:
- UK wind generation reached a 3-month high of 12.8GW early in the week.
- Day-ahead prices saw large gains on Monday 1st July, after the wind output dropped off.
- Seasonal contracts made overall losses for the second week in a row.
- IFA (France-UK Interconnector) and Nemo Link both experienced unplanned outages.
On Monday 1st July, strength in gas and carbon – plus an unplanned outage of the Nemo Link joining the UK’s electricity system to Belgium’s – supported day-ahead prices. A big decrease in wind generation during that day was also a factor in the large upward movement in the day ahead price. The strength of the front month National Balancing Point (NBP) gas was due, in part, to reduced gas flows from Norway because of an extended outage at the Nyhamna natural gas processing plant.
There was a jump in day-ahead prices on Tuesday 2nd July, off the back of a tight supply forecast for Wednesday 3rd. The supply shortage was due to the planned outage of Hartlepool nuclear reactor 2, the continued outage of the Nemo Link, and a low forecast for wind generation.
On the morning of Wednesday 3rd July, two separate events caused bullish movement in day ahead prices. One was an unplanned outage on the Interconnexion France-Angleterre (IFA: France-UK Interconnector) that reduced capacity to 1GW. The second was another unplanned outage – this time at one of Drax Power Station’s four biomass units. Prompt prices then fell and finished down on the day due to strong wind generation forecasts for Thursday 4th July and the return of the IFA interconnector.
On Friday 5th July, the outage at Nyhamna was extended to 27th August and the continuing reduction in supply led to gas price gains. This uptick, and predictions that nuclear and wind output would be lower the coming week, caused prompt prices to finish the week strongly.
The imbalance price reached £80/MWh or higher on six separate occasions during week 27; the highest was £84/MWh on Friday 5th July, over periods 23 and 24 (11:30-12:30). National Grid set this price by accepting offers from Cruachan Power Station, a pumped storage hydroelectric plant near Loch Awe in Argyll and Bute, Scotland. The system operator also accepted offers from VPI Immingham, a gas-fuelled Combined Heat and Power (CHP) plant on the south bank of the river Humber.
The imbalance price reached a low of £0.04/MWh on Wednesday 3rd July from period 28 through to 30 (14:00-15:30). National Grid accepted bids solely from West Burton B power station, a combined cycle gas turbine (CCGT) plant in Nottinghamshire.
Renewables and other
Continuing the high output seen on Sunday 30th June, wind generation increased further on Monday 1st July. It reached a peak of 12.8GW (accounting for 39.8% of the UK’s generation); the highest level of wind output since 15th April 2019.
Wind generation fell considerably on both Tuesday 2nd and Wednesday 3rd July, and remained relatively low over the rest of week 27. During the second half of the week, wind output didn’t break above 6.8GW and the lowest output – just 1.5GW of generation – was at around 23:30 on the evening of Sunday 7th July.
Solar output was consistent at the start of the week, with daily peaks of around 6GW, increasing steadily to a high of 8.3GW on Thursday 4th July. It then fell to reach its lowest point of 5.2 GW on Saturday 6th July.
Secure and promote* (Seasons +1, +2, +3, +4) baseload contracts where down an average of £0.47/MWh over week 27.
At the beginning of the week, prices were firm on the curve due to strength in gas and carbon; however, the bearish movement in oil capped these gains. Early on Tuesday 2nd July, these contracts received support from National Balancing Point (NBP) gas and carbon. However, losses on oil and coal futures later in the trading session dragged down UK curve power prices too. The overall losses of that day continued on Wednesday 3rd July, due to further selling pressure on NBP and carbon contracts.
Seasonal contracts were mainly unchanged on Thursday 4th July; Friday 5th saw gains across these contracts due to bullishness in coal and oil. The upward movement in the oil price was a response to rising tensions over Iran and the extension to output cuts by the Organisation of Petroleum Exporting Countries (OPEC) and other nations (OPEC+). The rise was limited by concerns that a slowing global economy was reducing demand worldwide.
*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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