UK Energy prices tumble on strong supply, weak demand

27th April 2017 | Commercial Energy

UK energy prices (electricity and gas) tumbled in March. This was due to mild conditions and longer days, combined with a resumption on French power imports. So says S&P Global Platts data.

While prices were down on February, they remain strongly up year on year. This is the longer-term price trajectory referenced by retail suppliers, several of whom have raised household gas and power bills in 2017.

With the near-term decline in wholesale gas price outpacing that of electricity, UK gas-fired power production in March increased on February levels.

Generation from renewable and nuclear sources jumped 14% on month to 13.63 TWh in March.

Wind speeds were healthy, with production up 1TWh year on year to 2.74 TWh. Imports were back to normal (2.13 TWh with the return of the 2-GW IFA link to France.

Hydro and solar generation also picked up on a year on year comparison. Coal-fired generation of 1.46 TWh was down from 3.46 TWh in February and 4.12 TWh in March 2016. Electricity demand slipped 4% on year to 24.86 TWh.

“The peak-flattening effect caused by the UK’s growing solar park kicked in early this year, reducing the Day Ahead base-peak price spread to under £2/MWh mid-March. This according to Anuradha Ramanathan, Pricing Team Lead, European Electricity, S&P Global Platts.

In the gas market, March supply was boosted by a rise in regasification of liquefied natural gas from the South Hook terminal in line with a heavier Qatari delivery schedule into the facility. Beach supplies – Norway and the UK combined – remained firm during the final month of the Winter 2016-17 delivery period  This allows for a reduced reliance on imports from Continental Europe and storage withdrawals to balance the system, leading to the steep monthly price fall.

That’s a brief summary of why UK energy prices have tumbled recently.

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