Carbon prices saw “sharp losses” recently following the announcement that the backloading plan will not being implemented until the second quarter of this year.
That’s according to the latest weekly market report from npower, which suggests it led the market to believe that 300 million permits would be withdrawn rather than the expected 400 million.
Backloading is expected to help prices rebound from levels that are believed to be too low to encourage utilities to shift from coal to less-polluting natural gas and to boost investment in renewable energy.
Strong wind output and two nuclear power plants being connected back on the grid meant power peak margins were above 2GW throughout last week, Ben Spry, Optimisation Desk Manager at npower said.
He added that both power and gas contracts “pushed lower for the majority of the week” as the Pound strengthened against the Euro.
Looking forwarded Mr Spry said: “In particular this week, keep an eye out on GDP data releases from the UK and the US as well as announcements from the Central Bank in both countries, i.e. the Bank of England and also the Federal Reserve in the US.”
The UK has “very healthy” gas storage levels and “comfortable” power margins with wind generation “continuing to push CCGT [Combined Cycle Gas Turbine] out of the stack”, he added – which means the nation should be able to meet an increase in demand if there are numerous unexpected cold spells.