News / Weekly Energy Report - Coal’s back; imbalance prices negative

Weekly Energy Report - Coal’s back; imbalance prices negative

Haven Power’s market report keeps you updated on the weekly changes in the energy market. Here’s our take on what’s happened over the past 7 days, starting Monday 3rd June:

  • Coal returned to the UK generation mix after more than 18 days away
  • Negative imbalance prices also came back again during week 23
  • Brent Crude Oil strengthened after news of possible delay to US tariffs on Mexico
  • Power curve struggled for direction as fuel commodities send mixed signals

Read more below:

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Prompt/Day-ahead Power

Prices for day-ahead baseload delivery climbed throughout week 23, with the expectation of declining wind output and lower temperatures leading to increased demand.

Day-ahead baseload prices were lowest at the start of the week. Wind output was comfortably above 8GW for most of Monday 3rd June, before plummeting in the early hours of Tuesday 4th June. The lack of relatively cheap wind generation on that second day of the week led to an increase in the price for delivery. The same was true on Wednesday 5th and Thursday 6th June, as wind output dwindled to around 3-4GW and more gas-fired generation was required.

Day-ahead prices reached their peak in week 23 for delivery on Sunday 9th June, when wind output again reduced dramatically. When demand peaked at 31GW in the late afternoon, 15.8GW of gas-fired generation was on the UK system – compared to just 5.8GW of output from renewable wind and solar.

2019-06-10 pricingreportgraphs1

Imbalance Prices

Week 23 saw more negative imbalance prices, and prices broke through the £100/MWh mark.

The lowest price for the week was for settlement period 22 (10:00-10:30) on Monday 3rd June, when wind output was around 10GW (30% of the total power supply). The final price for this settlement period was -£60/MWh, when the UK system was 180MWh in imbalance. National Grid set this by accepting a bid to reduce output from unit 2 at Drax power station. Numerous transmission-connected wind farms also had bids accepted to reduce output; for example, National Grid paid Whitelee Wind Farm £74.37/MWh for 126MWh of output reduction.

The highest imbalance price for the week was for settlement period 35 (17:00-17:30) on Tuesday 4th June, when the UK system was more than 500MWh in imbalance. The final price was set by accepted offers of £104/MWh from Dinorwig pumped storage hydro plant, which increased generation output by 100MWh.

2019-06-10 pricingreportgraphs3

Renewables and other

Renewable output was particularly strong at the beginning of the week. Solar and wind output combined to make up over 45% of power supply at 13.00 on Monday 3rd June. Renewables made up most of the UK supply mix again on Saturday 8th June, when wind and solar combined to contribute 14GW (45.5% of power production).

Coal-fired generation returned to the UK generation mix during week 23, after an absence of more than 18 days. Coal plants contributed a small amount to UK power supply on 5 of the 7 days, mostly in the early hours and when wind output was at low levels. The week’s average carbon emissions from power generation were 191g/kWh, up slightly on the previous week.

2019-06-10 pricingreportgraphs4

Seasonal Contracts

Secure and promote* (Seasons +1, +2, +3, +4) baseload contracts were trading on a largely flat trajectory for the majority of week 23. The UK curve struggled for direction over the 7 days, with fuel commodities steering it one way then the other. However, during trading on Friday 7th June, fuel commodities encouraged the curve to make reasonable gains. European carbon and coal made intra-day gains and the Brent Crude Oil benchmark strengthened due to the possible delay to US tariffs on Mexico. This boosted US stocks, which drive oil prices.

2019-06-10 pricingreportgraphs2

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

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 winter 19 and summer 20.

2019-06-10 annual-prices

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, 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.

Disclaimer

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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