Lack of supply saw gas and power prices soar in Q3

Supply concerns meant wholesale gas and power prices increased at the strongest rate in five years in the third quarter (Q3) of 2016. UK electricity prices increased at the end […]

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By Jonny Bairstow

Supply concerns meant wholesale gas and power prices increased at the strongest rate in five years in the third quarter (Q3) of 2016.

UK electricity prices increased at the end of Q3 due to concerns over potential power supply shortages over winter, according to market information firm ICIS.

This saw more gas being needed to generate electricity so gas prices also rose.

The ICIS Power Index increased to 17-month highs at the end of Q3. Average prices for both gas and power were up by 13% from Q2, the largest quarter-on-quarter gain since 2010.

It also found the average price of electricity over Q3 was £43.06MWh, with average gas prices averaging 40.98 pence per therm (p/th).

Zoe Double, Head of Power at ICIS, said: “The record highs in UK short-term prices in September and then subsequent concerns over levels of French imports this winter show the market’s concern over the tight supply margin, which boosted long term prices in the third quarter.

“Looking ahead to future winters, this margin is expected to improve but strong demand or supply disruption in the next six months could continue to make traders nervous.”