Key Headlines

Wholesale:

Most seasonal power and gas contracts decreased over the last two weeks, although price movements were relatively subdued. Gas and power prices were pushed lower by healthy gas supplies and lower demand due to warmer weather.

However, rising oil prices acted to limit losses, with most gas and power contracts losing less than 1% over the last fortnight.

Looking ahead:

The gas supply outlook remains comfortable, with a continued influx of LNG imports arriving at UK terminals, which should help to limit upwards price movements. However, forecasts of lower temperatures and weaker wind generation is likely to push near-term contracts higher, and these movements will likely feed through into seasonal contracts.

Oil and carbon prices are projected to remain close to their current, relatively high, levels, and remain an upwards driver for seasonal contracts.

Third party charges and industry updates:

Over the Easter weekend, Britain broke its record for the longest period without using coal to generate power. Coal was not used for 90 hours and 45 minutes breaking a record which was set in April 2018. On 23 April, Energy and Clean Growth Minister Claire Perry said she is confident that the UK will meet the fourth and fifth carbon budgets. Under the budgets, government is committed to reducing carbon emissions to 51% and 57% below 1990 levels by 2025 and 2030, respectively.

Wholesale Power and Gas

Power:

Power for delivery in winter 2019 lost 1.3% to £60.0/MWh and summer 20 power slipped 0.5% to £51.2/MWh. Falling gas prices helped to push power prices lower, whilst a slight drop in the price of carbon emission allowances also weighed on prices. However, the price of EU carbon allowances remained above €26/t, close to 10-year high levels.

Gas: 

Gas prices were driven lower by has healthy supply outlook, with a continued influx of LNG to GB terminals and by the shutdown of the IUK pipeline between GB and Belgium for planned maintenance. The pipeline is usually used to export gas from GB to Europe, however, with it out of action greater volumes of gas were available for use in GB. Winter 19 gas fell 2.0% to 57.2p/th, while gas for delivery in summer 2020 edged 0.5% lower to 47.6p/th.

Third Party Charges and Industry Updates

Coal-free record broken over Easter weekend

Britain broke its record for the longest period without generating any electricity from coal over the Easter weekend. UK Coal, an account which posts hourly updates of National Grid ESO’s coal generation, tweeted on Monday 22 April that Britain went for 90 hours and 45 minutes without any coal-powered generation, breaking the previous record of 76 hours and 10 minutes set in April last year.

Perry “confident” of meeting fourth and fifth carbon targets.

Responding to a question at a Commons Science and Technology Committee evidence session on 23 April, Energy and Clean Growth Minister Claire Perry said that she is “confident” that the UK will meet the fourth and fifth carbon budgets in the time frame given. MPs highlighted the Committee on Climate Change predicting that the UK will not meet the budgets, to which Perry responded that there has been an acceleration of policy delivery and a reduction in technology cost, as well as an increased focus due to the publication of the IPCC Special Report. Under the fourth and fifth carbon budgets, government is committed to reducing carbon emissions to 51% and 57% below 1990 levels by 2025 and 2030, respectively.

By OnlineDIRECT Marketing Team