Weekly Energy Report - Wind soars; day-ahead prices fall
20th August 2019
For your weekly update on the energy market, read the Haven Power market report. Here’s our summary for the past 7 days, starting Monday 12th August:
- Wind output reached highest weekly average since week 11, pressuring prompt power prices.
- Curve power products lost value due to lower prices across the energy complex.
- Solar output was highly variable, with some days falling to 5-month lows. Liquefied Natural Gas deliveries to UK terminals remained low for August.
Read more below:
Day-ahead prices for Monday 12th August surged as wind output fell and the system needed more gas generation to meet demand. A bullish National Balancing Point (NBP) day-ahead price also helped the power prompt to realise gains.
Day-ahead prices for Tuesday 13th August moved higher still, as wind generation fell further. On the next day, prompt prices were up following NBP’s rise (attributed to reduced flows into UK conventional gas and Liquefied Natural Gas (LNG) terminals. This bullishness in the day-ahead power price was also the result of increasing power demand and low solar output, and occurred despite wind output increasing.
As wind output soared, day-ahead prices for Thursday 15th August dropped sharply. NBP gas prices were also under pressure, as the system shortage from the previous day was reversed due to the high wind output reducing demand for gas power plants. In turn, this decreased the volume of gas drawn from the system.
Day-ahead prices for Friday 16th August continued to fall, as wind output remained strong. NBP gas prices also fell day-on-day, as demand on the UK’s gas network remained low. This week’s falling NBP day-ahead price happened in spite of the recent low levels of LNG shipped to UK terminals; just one vessel has arrived so far in August.
The system imbalance price remained above £10/MWh for most of week 33, although it fell to its lowest price (£2/MWh) during settlement periods 29 and 30 (14:00-15:00) on Sunday 18th August. The price dropped due to National Grid accepting bids from an unknown counterparty to reduce its production or increase its power consumption.
The week’s highest system price was also set on Sunday 18th, during settlement period 47 (22:00-22:30). The price of £88/MWh was set by multiple accepted offers to increase production from Ffestiniog Power Station. This is a 360MW capacity pumped storage hydroelectric scheme in Gwynedd, north west Wales.
Renewables and other
On Monday 12th August, wind output fell from its high levels (~10.6GW) of Sunday 11th August to a low of 2.3GW; it remained at a low level over Tuesday 13th August too. Solar started Monday with output of 5.1GW, in line with its peaks at the end of week 32. However, the next day saw solar hit its highest levels (6.65GW) since 29th July.
Wind output continued to rise over on Wednesday 14th August until reaching 13.55MW at 11:05 on Thursday 15th. Later that day, there was a temporary dip in wind output (down to 5GW), although this rebounded to a new week-high of 14.2GW at approximately 13:00 on Friday 16th. Wind finished the week with consistently strong levels of output, ranging between 8.9GW and 12.3GW, and average wind output was up slightly week-on-week from 7.66GW to 7.78GW.
In terms of solar, Wednesday 14th August produced the lowest output seen since 3rd March (1.69GW) before finishing the week with relatively strong generation levels. The week’s highest output of 6.85GW came on Saturday 17th August. The weekly averages fell for the fourth week in a row; down 1.78GW to 1.64GW from week 32 to 33.
Secure and promote* (Seasons +1, +2, +3, +4) baseload contracts were down by an average of £1.08/MWh over week 33.
These seasonal contracts lost value during the trading session on Monday 12th August; power prices followed bearish movements in European Union Allowance (EUA) carbon, coal and – to a certain extent – NBP gas curve products.
The secure and promote contract prices ticked higher on Tuesday 13th August, as carbon and coal prices realised modest gains. On Wednesday 14th August, curve contracts all moved lower as the wider energy complex experienced losses. Brent crude oil prices fell amid persistent US-China trade war concerns, in addition to worries over a slowing global economy. EUA carbon and NBP curve products were also down on the day – something that repeated (alongside falls in NBP contracts) on Thursday 15th August to cause losses on curve power prices again.
On Friday 16th August, UK curve power products saw small gains early in the trading session. However, all had lost value by the end of the day thanks to losses across the wider energy complex, with falling prices in NBP products, carbon, oil and coal.
*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 and George Goodhew - 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.