UK gas generation hit six-year highs in January

UK gas-fired power generation reached six-year highs in January. That’s according to new statistics from S&P Global Platts, which show both day-ahead gas and power prices climbed strongly as demand hit 2.21 […]

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By Jonny Bairstow

UK gas-fired power generation reached six-year highs in January.

That’s according to new statistics from S&P Global Platts, which show both day-ahead gas and power prices climbed strongly as demand hit 2.21 billion cubic meters (bcm).

This is an increase of 6% month-on-month and 30% year-on-year.

Total gas-for-power demand for this winter currently stands at 8.43 bcm, already 16% higher than total gas-for-power demand during the whole of the season last year.

However, colder-than-average temperatures, a weak LNG delivery schedule and more expensive Continental European gas hub pricing means plant profits are coming under increasing pressure.

The month-ahead clean spark spread – the theoretical margin available for a 50%-efficient gas plant – is declining.

On the final day of January it was at £7.7/MWh, down from £12.2/MWh at the start of the month and far below its average of £29/MWh during November.

Meanwhile the quarter-ahead clean spark spread has hovered around £6-£7/MWh this year, suggesting the recent peak in gas-fired profitability is not expected to run into the summer.

Henry Edwardes-Evans, Managing Editor of the S&P Global Platts’s ‘Power in Europe’ publication, said: “Improved economics for UK gas plants have coincided with coal plant closures, accelerated by the UK Government’s Carbon Price Floor.”

Gas-fired power plants were among the winners in the latest electricity capacity auction.