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 27th August:
Day-ahead prices saw mixed movement throughout week 35, with volatile wind generation and bullish gas the main driver of prices throughout. Strong peak solar generation offered little pressure to temper prices.
The week’s highest price of £68.22/MWh was for baseload power on 30th August, where gas generation was brought online to fill the gap created by low levels of wind. The relatively high cost of coal and carbon kept these options out of the mix.
The week’s low price of £55.02/MWh was for baseload delivery on 27th August when wind generation reached almost 10GW of output. Due to this high level of wind, the UK required less expensive fossil fuel generation – and coal output fell to zero over the course of the day.
The average of all single imbalance prices during week 35 was £57.12/MWh; 10% lower than the previous week. This can be explained by higher than average wind generation (compared to earlier weeks) tempering stronger gas prices.
The week’s lowest price of -£45/MWh was for settlement period 10 (04:30-05:00) on 27th August, with strong overnight wind generation generating nearly 45% of supply.
The highest price for the week was £112.94/MWh for settlement period 36 (17:30-18:00) on 27th August. At this time, falling wind and solar generation combined with a demand spike, leading to a call for more expensive gas generation units to come online.
Solar and wind output contributed to 18% of the UK generation mix over week 35. Renewable output was highest on 27th August, when the combination contributed over 40% through the day, although both decreased from the mid-afternoon.
Wind generation for 27th August was roughly 10GW throughout the day. However, it averaged around 2GW for the rest of the week, forcing more gas generation into the UK fuel mix. The high price of gas drove prompt contract prices higher.
Secure and promote* (Seasons +1, +2, +3, +4) baseload contracts continued their bullish trend through the week. However, they saw a bearish turn on Thursday, 30th August, leading to an average decrease of £0.23/MWh.
Gas and carbon prices led the curve for the week, with Norwegian outages and minimal liquefied natural gas (LNG) imports pushing contracts upwards. Notifications of incoming LNG imports and weaker continental demand on Thursday led to a drop in gas prices, subsequently followed by all other contracts.
Carbon remained strong, with fossil fuels remaining a key part of the generation mix. Support for this strength followed announcements of regulatory reform heading into 2019 to limit oversupply.
*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, on 01473 707755 quoting reference HP250.
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