Stay updated on energy market changes over the last 7 days with Haven Power’s market report.
Here’s a summary of the week starting 25th June:
Day-ahead baseload prices averaged £53.67/MWh over the course of week 26, a slight increase compared to last week. The high of £55.12/MWh was for delivery on 25th June; the low of £51.00/MWh was for delivery on 30th June.
With wind output low over the majority of the week, day-ahead prices remained largely inflated due to the reliance on gas-fired generation (which is more expensive than wind generation). Although day-ahead prices did follow the usual trend downwards as wind output increased as the week progressed, levels of generation were still relatively low. In addition, they were highest during the overnight period, away from peak demand.
Single imbalance prices during week 26 averaged £53.13/MWh, with no periods of negative prices.
The week’s highest final price was £94/MWh, for settlement period 16 (07:30-08:00) on 26th June. This was when the UK system switched from being long (too much generated power compared to demand) to short (too little), causing an imbalance.
National Grid took numerous actions to re-balance the system, the most significant being the payment of £94/MWh to Fiddlers Ferry to generate. The coal-fired power station contributed over 280MWh, which ultimately set the week’s highest price. The lowest price (£0.00/MWh) was for settlement period 18 (08:30-09:00) on 28th June.
The sunny conditions of previous weeks continued during week 26. This meant there was high solar output throughout, with a peak of 9.4GW on 27th June and levels of over 9GW on all other days except Sunday 1st July.
Wind output dwindled for the majority of the week before climbing over the weekend, although it was still at only a fairly muted level of 4-6GW. The gradual increase in wind output was enough to suppress day-ahead prices as the week progressed, although the UK system remained reliant on more expensive gas-fired generation.
Secure and Promote* (Seasons +1, +2, +3, +4) baseload contracts experienced gains across the board during week 26, with an average increase of £1.35/MWh.
The slight losses in value at the beginning of the week were due to oil-led weakness in the National Balancing Point (NBP) market for gas. There were large gains in all contracts during trading on Wednesday 27th with bullishness affecting fuel commodities. Following data showing a larger than expected reduction US inventories, the upwards movement of the Brent Crude oil benchmark continued its recent influence over UK gas and power prices. The bullish behaviour of oil prices continued for the rest of the week, with gas and power continuing to track the movements of oil. Both gas and power are considered to be in healthy supply in the UK market, suggesting that these contracts would be lower in value if oil prices hadn’t been so strong .
*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 18 and Summer 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 Andrew Jarman, Haven Power’s Portfolio Analysts. To speak to them, or the rest of our Flex & Portfolio Management team’s analysts, call us on 01473 707755 quoting reference HP250.
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