Wednesday 29 October 2014

Power prices leap after “tight” winter outlook – DMR

UK power prices shot up a fifth yesterday after National Grid revealed there are tighter power margins over the winter, according to the daily market report.

The grid operator announced yesterday there is a margin or gap of just 4.1% spare energy generation above the country's needs.

Tim Carter, Client Portfolio Manager at npower’s Optimisation Desk said: “Following the publication of National Grid’s Winter Outlook… power day-ahead prices jumped 22% to over £52 [per megawatt hour].”

This helped to “firm up” prices for power further out along the curve, i.e. in future, as well.

However seasonal prices for power next summer and winter stayed “pretty much flat” compared to prices last night, said the analyst.

As for the amount of gas in the UK's system, today it is “extremely short”, mainly caused by higher demand from the local distribution zones (LDZ). These are the network of pipes which carry gas to small businesses and domestic customers. The boost is down to chillier temperatures.