Coal plant outages in the UK mean more gas power plants should be looking to come online suggests today’s market from npower analysts.
Effectively this means the amount of money you make for running a gas power station has widened at the moment.
Steven Walker, Client Portfolio Manager at npower said the price for “clean taxed” contracts – basically the value that a power station makes from selling power and burning gas including the price of carbon – gained 20 pence yesterday.
He said: “April and summer 14 power contracts still remain firmer than their underlying fuels – the April 14 clean taxed spark spread gained 20p per megawatt hour.”
As for the UK gas system this morning, it opened 20 million cubic meters (mcm) long – i.e. that much more than is needed – because “maximum volumes are nominated through the Langeled pipeline”.
The UK is expected to import 37 mcm along the UK-Dutch pipeline BBL which connects Balgzand in the Netherlands with the Bacton terminal, he added.
Late yesterday European gas market prices went down while the NBP, the UK gas market, didn’t go down as much.
This made the UK more attractive for gas, the analyst said: “Spreads to the continent widened towards the close last night incentivising these additional flows to the UK.”
But he added: “These sources aren’t typically that flexible within-day so we’re looking at storage to help support demand.”
If you’re a storage facility looking to inject gas in the summer, it’s may well be cheaper to buy gas today, depending on the risk of whether it is going to go down further, suggested Mr Walker: “The within day contract trades three-quarters of a penny below the other prompt contracts.”
Wind generation is 1GW lower today peaking at 5.3GW and dropping to 4GW tomorrow: “These levels are still reasonable given the low demand with overnight temperature forecasts suggesting this will change from a generally warm end to March.”