Seasonal Power and Gas Contracts Reach New Highs

Worries of another cold snap pushes near-term gas and power contracts higher, whilst seasonal contracts reach fresh highs. Oil prices begin to reverse losses from the previous week. 

Last week we saw all near-term power and gas contracts experience gains as a result of worries of more cold weather. Seasonal power and gas contracts also reached fresh multi-year highs while carbon prices increased even more on the week before.  Moving away from the wholesale market, coal-fired power stations were running at high levels because of the higher near-term gas prices. This showed that coal still has a role to play in the UK’s generation mix in the short-term. 


Seasonal Power and Gas Contracts Reach New Highs

Day-ahead power and gas revert to norm after spiking in the previous week, whilst seasonal contracts and carbon prices reach new highs. Analysis shows UK carbon emissions in 2017 drop to lowest levels since 1890. 

Last week we saw day-ahead power and gas prices fall back to normal levels after considerable spiking the week before. Seasonal power and gas contracts along with carbon prices reached new highs after experiencing losses in the previous week. Outside of the wholesale market, recent analysis showed that the UK’s carbon emissions in 2017 had fallen to their lowest levels since 1890 which was primarily as a result of the reduction in coal use last year. 


Prices Hit Record Highs Amid Gas Shortage Warning and Plant Outages

Cold weather and high levels of gas demand causes National Grid to issue a gas deficit warning, leading to major price spikes. Higher gas prices and numerous power station outages drive power prices higher. 

It was quite an eventful week last week with much colder weather conditions sweeping across the country. On Thursday, National Grid issued its first gas deficit when around around 14% of daily gas demand could not be met, sending near-term gas prices shooting upwards. Luckily, high levels of wind generation, meant power supplies remained relatively comfortable. 


Gas and Commodity Prices Rise, Power Follows

Cold temperatures push gas prices to multi-month highs, with power prices following upwards. Commodity prices also move higher. BEIS data shows record high low-carbon generation. 

Last week both power and gas prices continued to rise, while underlying commodity prices also experienced gains. Day-ahead experienced the biggest gains, reaching £64.0/MWh on Friday. Rising gas prices seemed to be the main driver of costs this week, amid forecasts of colder weather. Outside the wholesale market, the latest statistics from the Department for Business, Energy and Industrial Strategy (BEIS) illustrates how our generation mix is changing. In 2017, low-carbon generation accounted for a record high 47% of electricity supply! 


Carbon Prices Hit Six-Year High

Power prices rebound upwards while EU ETS carbon hits a six-year high. National Grid publishes forward Electricity System Operator plans. 

Last week we saw wholesale power and gas prices rebound upwards, despite mixed movements in underlying commodity markets. There was a rise in seasonal power prices which was mostly in Summer ’18 and Summer ’20. Carbon prices reached a six-year high last week even with the EU ETS being oversupplied. Outside of the wholesale markets, National Grid issued their first annual forward plan for the Electricity System Operator which shows it’s goals and priorities for this year. 


T-4 Capacity Market Clears at Lowest Ever Price

The T-4 Capacity Market auction clears at lowest ever price, power and gas prices reach multi-month lows. 

Last week we saw the T-4 Capacity Auction clear at it’s lowest ever price. The auction seeks to ensure security of supply for winter 2021, and provides an outlook of our future generation mix. Gas will make up almost of half of supply when the system is tight, while the lack of coal-capacity agreements may cause more coal-plant closures in the near future. In the wholesale market, all commodity, gas and power prices moved lower. 


Gas Prices Depress Power Prices

Wholesale prices move lower. The T-1 Capacity Market auction clears at lowest ever price, whilst Eggborough coal power station announces closure. 

Last week we saw both electricity and gas contracts continue in their downward trend, with the gas market being a key driver of the power market. It was part of an energy domino effect as Brent crude oil’s decline influenced the gas market. Outside of the wholesale market, the T-1 capacity auction cleared at it’s lowest price since it was first introduced, and we saw the closure of yet another coal-fired station. 


Gas Prices Drag Power Lower

Power and gas contracts continue to move lower. Brent crude oil reaches a new three-year high. Embedded benefits injunction rejected, Future Energy exits the market. 

Last week showed continuing downward trends in nearly all near-term power and gas contracts. Seasonal power contracts also fell with Winter 18 and Summer 18 contracts dropping to their lowest levels in three months. There had been several disruptions to GB gas supplies towards the end of 2017 which attributed to the fall in power prices. There was also very good news for consumers this week as the High Court decided to reject Ofgem’s injunction application. 


Power Prices Retreat from Multi-Year Highs

Power and gas contracts decrease, retreating from multi-year highs. Ofgem’s embedded benefits decisions face an injunction. 
Ofgem’s recent decision to lower the financial benefits received by small-scale generators now faces an injunction, following a Judicial Review. Currently, small generators can earn significant amounts of money by exporting power to the network during winter periods of high demand. Such an injunction would reduce these payments by 95%, but consumers would save up to £7bn by 2034. In the wholesale market, all power and gas contracts decreased, with wind generation causing near-term power and gas contracts to drop. Seasonal power contracts failed to hold on to their multi-year highs, while Brent crude oil reached a three-year high. 



Seasonal Gas and Power Prices Reach New Highs

BEIS Energy and Emissions Projections predict UK will miss fourth and fifth carbon budgets. 

Last week, the department for Business, Energy and Industrial Strategy, published its latest Energy and Emissions Projections. The main headlines stated that the UK is expected to miss its fourth and fifth carbon budgets, and coal-fired capacity is forecasted to fall to 1 gigawatt by 2015. In the wholesale market, seasonal contracts decreased overall, while near-term prices showed mixed movements throughout the week.