Weekly Energy Report - Baseload day-ahead at 2-year lows
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 2nd September:
- Baseload day-ahead price fell to £30.50/MWh, pressured by spiking wind and high gas supplies.
- Wind output remained high on weekdays, dropping briskly over the weekend.
- The system price was frequently negative throughout week 36.
- Secure and promote contracts fell marginally following mixed movement in wider energy complex.
Read more below:
Prompt prices for delivery on Monday 2nd September were up on the previous weekday. This was due to a 3.1GW drop in the daily average wind output.
The day-ahead price for Tuesday 3rd September dropped, tracking a 24.1% fall in the National Balancing Point (NBP) gas prompt price. The NBP prompt was under selling pressure, due to the increased supply of Liquified Natural Gas (LNG) from a vessel arriving at the South Hook terminal on Sunday 1st September. Flows of Norwegian gas to UK terminals were also increased, weighing on the gas day-ahead.
Prompt prices for delivery on Wednesday 4th September moved lower than those seen the previous day. This was because selling pressure continued on the NBP day-ahead price, pushing contract prices to a 10-year low of 18.75p/therm. As a result, the day-ahead baseload price fell to £30.50/MWh – the lowest since June 2017.
Day-ahead prices for Thursday 5th September increased, reacting to a falling wind output and an NBP day-ahead price that closed marginally down on the previous day. The day-ahead price for delivery on Friday 6th September fell due to a spike in wind output. Wind generation then increased over the day to reach a weekly high of 13.85GW in the early afternoon.
Over week 36, the system price was negative for over ten settlement periods. However, most of the negative prices were seen on Monday 2nd September, where the system price dipped below £55/MWh during five settlement periods. The lowest price was set during period 45 (22:00 – 22:30) from bids to reduce production at the 228MW capacity onshore generator in Kilgallioch Windfarm in South Ayrshire.
The highest system price came on Thursday 5th September during period 41 (20:00 – 20:30). This was set at £100/MWh by Ffestiniog Power Station, a 360MW pumped storage hydroelectric plant in Gwynedd, Wales.
Renewables and other
Monday 2nd September saw wind output rebound from the falling generation levels seen on Sunday 1st. After reaching lows of 3.5GW in the morning, wind surged to peak at 11.4GW in the late evening. On Tuesday 3rd September, average wind generation levels rose marginally day-on-day to 7.95GW. However, it didn’t reach the highs seen on the previous day.
Solar generation started week 36 with relatively weak outputs, with peaks of just 5.25GW and 4.1GW on Monday and Tuesday respectively.
Over the midweek, wind output increased, reaching daily peaks of 12.9GW on Wednesday 4th September and 13.85GW on Friday 6th. Solar generation increased on Wednesday 4th and Thursday 5th September, dropping then to a weekly low of 3.35GW on Friday 6th.
Over the weekend, a steep drop in wind generation saw daily averages fall from 11.25GW on Friday 6th September to 5.9GW on Saturday and 2.65GW on Sunday. Solar remained low on Saturday 7th September, rising again on Sunday to the highest peak of the week, with a maximum output of 6.4GW.
The average weekly wind output increased week-on-week from 6.45GW to 8.1GW. In contrast, the weekly solar average fell from 1.8GW to 1.6GW.
Over week 36, secure and promote* (Seasons +1, +2, +3, +4) baseload contracts fell, on average, by £0.15/MWh.
On Monday 2nd September, curve power contract prices moved lower amid a drop on NBP gas equivalent contracts. EU Allowance (EUA) carbon contract prices also fell, dragging down the power price with them. The Dec-19 carbon price closed at 4.3% down on the price from Friday 30th August. The Brent Crude front month was also down on the previous session at the close, dropping by 2.9%.
Tuesday 3rd September saw mixed movement in secure and promote products. NBP equivalent products fell slightly on the day, whereas the Dec-19 EUA carbon price was largely unchanged by the close. These factors meant that, on average, power contract prices closed at similar levels to those seen the previous day.
The following day, power products on the near curve moved marginally lower, thanks to a slight fall in NBP products on the near gas curve. EUA carbon and API2 coal prices finished the trading session almost flat, day-on-day, and therefore had little impact on power prices.
Over Thursday 5th September, the power curve rallied following moderate bullishness in coal and carbon prices. Curve NBP contracts also found strength during the trading session, closing higher day-to-day.
Friday 6th September saw a slight rise in curve prices, following mixed movements in the energy complex. Rotterdam Coal and NBP gas curve prices made gains on the day, providing support to the power curve. However, these gains were capped by losses on the EUA Dec-19 carbon price. By Friday’s close, contracts prices finished 4.1% down over the week.
*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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