Weekly Energy Report - Windfarms set lowest imbalance price since May
3rd September 2019
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 26th August:
- Four windfarms set an imbalance price of -£65.93/MWh, the lowest price since Sunday 26th May.
- Day-ahead power prices fell, following the rise in wind output.
- Bullish carbon and National Balancing Point (NBP) gas prices help secure and promote products make gains.
- Weekly average wind output makes small gains, while week-on-week solar output falls.
Read more below:
The day ahead baseload price for Monday 26th August was mostly unchanged, compared to those seen at the end of week 34. This was due to similar levels of wind generation as we transitioned into week 35.
The prompt price for Tuesday 27th August moved higher as average daily wind output fell by approximately 500MW day-on-day. Prompt prices for the following day became lower in response to a 3.5GW rise in daily average wind output. In addition, the NBP day-ahead price was largely unchanged on the day, helping to prevent prompt power price losses extending further.
Day ahead prices, for delivery over Thursday 29th and Friday 30th August, were down day-on-day due to continuously rising wind output. However, a rising NBP gas day-ahead price did provide some support for the day-ahead power prices. Continuing outages, caused by maintenance on Norwegian gas fields, were a notable bullish driver on short-term European gas prices.
During week 35, negative system prices returned to the balancing mechanism, after being absent since Wednesday 17th July. The lowest price of -£65.93/MWh was seen during settlement period 35 (17:00-17:30) on Saturday 31st August. This price was set by accepted bids to decrease generation at four different windfarms owned by the same generator. These include the Black Law, Dersalloch, Hare Hill and Glen App windfarms; all located in central and southwest Scotland.
The highest imbalance price in week 35 was £85/MWh. This price occurred during settlement period 48 (23:30-00:00) and was set by Spalding Power Station, an 860GW capacity gas fired generator situated north of Spalding, Lincolnshire.
Renewables and other
During Monday 26th & Tuesday 27th August there were low levels of wind generation, averaging 2.3GW over the two-day period. The lowest level of wind output occurred on Tuesday morning, falling to just 1.15GW. In contrast, solar output on Monday was high, peaking at 7.46GW. This was in line with the high levels of generation seen over the weekend of week 34.
On Wednesday 28th August, wind output rose to an average of 5.6GW on Wednesday 28th. This increased further on Thursday 29th August, reaching an average generation of 8.9GW. Solar generation fell midweek, peaking on Wednesday at just 4.05GW.
The high levels of wind output continued on Friday 30th August, with the week’s highest level of generation occurring during the early afternoon of that day. Solar output peaks ranged from 6.30GW to 5GW for the rest of week 35. Over the weekend, wind generation fell steadily, with Saturday 31st August and Sunday 1st September averaging 8.6GW and 6.6GW respectively.
Average weekly wind generation was up slightly, increasing from 6.25GW in week 34 to 6.45GW in week 35. Conversely, the weekly solar average decreased, from 2.2GW to 1.80GW.
Over week 35, secure and promote* (Seasons +1, +2, +3, +4) baseload contracts were up by an average of £0.43/MWh.
On Tuesday 27th August the power curve lost value across all products. A falling EUA (European Emission Allowances) carbon price was the dominant factor affecting seasonal power prices. However, there was a drop in NBP curve prices, which also put pressure on the power curve.
On Wednesday 28th August, curve power contracts rebounded slightly as they reacted to a bullish move in carbon. The EUA Dec-19 contract was up by 2% on the day, which is a change to the bearish trend we’ve seen in carbon prices over the last five weeks. This bearishness is attributed to the fall in European industrial activity, caused by the slowing global economy. The decreased industrial activity lowers power demand. This, in turn, decreases purchases of carbon receipts, a requirement for all CO2 producing power generators.
Over Thursday 29th August carbon prices continued to rise, providing bullish momentum to UK power curve contracts. Upward movement in NBP curve products also helped lift power prices.
Curve power prices opened higher on Friday 30th August. However, due to weakness in the overall energy complex, they posted losses over the course of the day’s trading session. Carbon, NBP curve products and Brent crude oil all moved lower on the day.
Over week 35, EUA carbon prices managed to partly shake off the bearish sentiment that’s persisted since Wednesday 24th July, when the contract hit an all-time high of €29.95/t. The EUA Dec-19 contract also increased from €25.14/t to €26.32/t.
*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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