The Haven Power Market Report

Week 51 The Haven Power Market Report is a weekly pricing report that analyses and explains energy market fluctuations over the past 7 days. It’s particularly relevant if you’re buying […]

Register now!

By Freddie Rand

Week 51

The Haven Power Market Report is a weekly pricing report that analyses and explains energy market fluctuations over the past 7 days.

It’s particularly relevant if you’re buying electricity flexibly, or about to sign or renew a fixed electricity contract. Getting these decisions right can reduce your vulnerability to price-peaks in the wholesale market and save you money.

For a more in-depth analysis from the company’s Flex & Portfolio Management team, speak to Haven Power directly on 01473 707755 quoting reference HP250.

Although this is our last Market Report of 2017, you’ll be able to find regular updates on our website. In the meantime, everyone at Haven Power wishes you a Merry Christmas and Happy New Year.

Annual Power

The annual power graph shows how the value of an annual power contract changes over time. The annual contract value is the average of the front two seasons, currently Summer 18 and Winter 18.

Summary

This week was an extremely volatile and interesting one for UK power and gas, with two key events contributing to a dramatic increase in prices. On Tuesday, an oil leak was found in the Forties Pipeline System (FPS) in Scotland (which also supplies gas). This is expected to be out of action for a few weeks at least, causing Brent crude oil prices to spike to a two-year high. Coincidentally, there was also a fire in the Central European Gas Hub in Baumgarten, Austria. This halted a major part of the gas transmission system for Russian gas flows to countries in Western Europe. These two events contributed to concerns about security of supply and, subsequently, a large increase in gas and power prices in the UK and northwest Europe on Tuesday. The rest of the week saw the risk premium slowly drop out, as gas flows resumed through the Baumgarten hub. News of milder weather to come may also have helped reduce demand for gas heating.

Seasonal Contracts

Secure and Promote* (Season +1, +2, +3, +4) baseload contracts gained on average £0.80/MWh over the course of last week. However, the Winter-18 Contract jumped as much as £1.90/MWh on Tuesday, due to the supply concerns outlined above. These events were the main driver of prices, although announcements about extensions to nuclear outages in the UK also supported the bullish trend. This was corrected later in the week, as growing confidence about the gas system’s supply pulled UK power prices lower. However, both gas and electricity were very volatile as the markets struggled to find a stable level following the erratic moves earlier in the week.

Prompt/Day-ahead Power

Wind output was the main driver of day-ahead baseload prices last week. The average value was £59.17/MWh, with the maximum of £67.64/MWh on Tuesday – when wind output reduced. The minimum of £54.99/MWh was on Friday. Wednesday’s power price was still quite high, due to the events of Tuesday causing day-ahead National Balancing Point (NBP) gas contracts to hit a six-year high, despite around 10GW of wind being forecast.

Imbalance Prices

Single cashout prices over the week averaged £64.48/MWh, reaching a maximum of £178.00/MWh on 12th December during settlement period 23 (11:00-11:30). In this period, National Grid paid Connah’s Quay (a gas-fired power station) to ramp up its production in order to meet demand. This was similar to the price-setting action taken last week. The minimum system price last week was £20.93/MWh, during settlement period 47 (23:00-23:30) on 17th December, during a period of relatively high wind output, and low demand on Sunday night.

Renewables and other

Wind generation was relatively productive last week, although Tuesday was particularly low – with the lowest level of around 2GW output at midday. Average wind output over the week was 7GW – 1GW lower than the previous week. Solar has been negligible over the last few weeks, but managed to hit 3.5GW output – 8.3% of national demand – for a brief time on Friday.

*For more information about Secure and Promote, please consult this Ofgem web page.

Disclaimer

Although all reasonable efforts have been made to verify the information in this report and provide the highest possible accuracy, no warranty, express or implied, is given by Haven Power Limited in respect of this information. Furthermore, the provision of this report does not constitute advice of any kind and should not be taken as the basis for any commercial or financial decisions.  Any such decision should be made on the basis of your own records, knowledge and perception of power market data, supplemented with appropriate independent expert advice when required.

This is a promoted article.