Weekly Energy Report - Baseload day-ahead price surges as gas rallies and wind falls
For your update on what’s happened in the energy market over the past week, get Haven Power’s market report. Here’s our summary for the past 7 days, starting Monday 29th July:
- Day-on-day baseload day-ahead price increases by the largest margin since Monday 24th June.
- Weekly averages for wind and solar generation drop in week 31.
- Dinorwig pumped-storage power station sets the highest imbalance price of the week for the first time since Thursday 11th July.
- Seasonal power contract prices track bullish movement in carbon.
Read more below:
Prompt prices for Monday 29th July were boosted by low wind output and rising demand. The next day, however, prices dropped as rising wind generation and weaker gas prices meant that power supply margins were more robust.
Day ahead prices for Wednesday 31st July were down to the lowest level seen since Monday 1st July. This was due to a surge in wind output and occurred despite the strength seen in NBP prompt gas prices. Prompt prices for Thursday 1st August, jumped back up as the National Balancing Point (NBP) gas prompt rallied and wind output fell significantly. The strength in the NBP prompt was due to rising consumption forecasts and a planned outage on the Bacton SEAL gas terminal.
Towards the end of week 31 prompt prices remained relatively high as renewables output remained low; meaning more expensive methods of generation (such as gas) were required to meet demand. UK power prices continued to find support from strong NBP gas day-ahead prices and a forecasted uptick in demand on Monday 5th August.
During settlement period 17 (08:00-08:30) on Thursday 1st August, the system price reached a weekly high of £110/MWh. This price was set by accepted offers from Dinorwig Pumped Storage Hydroelectric Power Station to switch on their generation. This fast response method of generation was required due to rising demand over the morning, and to make up for the rapidly falling wind output.
The lowest imbalance price of the week was during settlement period 15 (07:00-07:30) on Monday 29th July. A bid of £4/MWh was accepted from Medway Power Station, a gas-fired plant located on the Isle of Grain in Medway, Kent. As the bid price is positive, the power station paid National Grid to reduce their generation volume.
Renewables and other
On the morning of Monday 29th July, wind output started very low with just 1.8GW being produced; at the time meeting just 5% of the UK’s electricity demand. In contrast, solar started with a reasonably strong peak of 6.9GW. Tuesday 30th July saw week 31’slowest peak for solar, reaching only 3.7GW at maximum output.
From Tuesday 30th, wind generation increased, reaching a weekly high of 7.9GW on Wednesday 31st July at 11:00. Wind output then fell sharply that evening and continued to fall until reaching its weekly low of just 940MW on Friday 2nd August.
Solar remained within a 4-6GW range throughout the rest of the week, with the weekly average down from week 30 to just 1.96GW to 1.81GW.
Wind output increased again on Sunday evening to 4.6GW, though not enough to boost the weekly average to the levels seen last week, falling from 5.78GW to 3.41GW week-on-week.
Secure and promote* (Seasons +1, +2, +3, +4) baseload contracts saw average gains of £0.36/MWh over week 31.
Secure and promote products made gains on the morning of Monday 29th July, as coal and carbon both increased. Closing prices finished the day very mixed, as coal came off in the afternoon, with winter 19 and summer 21 both experiencing small losses, and both summer 20 and winter 20 finding small gains.
Sliding carbon and coal prices helped push the UK power curve downwards on Tuesday 30th July. Strength seen on the NBP curve did provide some support, preventing the UK power products from sliding further.
On Wednesday 31st July these contracts all saw gains as prices in gas and coal rose. However, weakness in EUA Carbon meant power prices were kept from rising further. Seasonal contracts continued to make gains on Thursday 1st August, as gas, carbon and coal all increased.
In the wider energy market, Brent crude oil dropped over 7% on Thursday 1st August, after the US announced an additional 10% tax on $300 billion of Chinese goods entering the US. This fall was the largest seen in over three years and can be attributed to fears over the US-China trade war further weakening the global economy and therefore reducing global oil demand.
On Friday 2nd July secure and promote products suffered overall losses on the day, following weakening support from coal and carbon prices.
*For more information about Secure and Promote, please consult this Ofgem web page.
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 winter 19 and summer 20.
To help you make sense of the industry, you can also use our jargon buster and handy guide to Third Party Costs (currently 60% of your bill). And for interesting articles and useful insights, look out for our blog.
Report written by Thomas Stebbings and Ben Symonds and George Goodhew - Haven Power’s Portfolio Analysts. To speak to them, or the rest of our Flex & Portfolio Management team’s analysts, call 01473 707755 quoting reference HP250.
Although we’ve made all reasonable effort to verify the information in this report and provide the highest possible accuracy, Haven Power Limited gives no warranty - express or implied - in respect of this information. Furthermore, our provision of this report does not constitute advice of any kind and readers should not take it as the basis for any commercial or financial decisions. You should make any such decision based on your own records, knowledge and perception of power market data, supplemented with appropriate independent expert advice when required.
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