|p/therm||16 Aug 19||23 Aug 19||Change|
The UK’s Day-Ahead gas price rose 4.8% to 27.30 p/therm ahead of major scheduled gas maintenance, which will see Norway’s Kollsness gas processing plant shutdown until 5th September, reducing gas pipeline imports to Britain.
A brief heatwave in the UK is also expected to prolong the switch to heating ahead of the winter season in just a month’s time.
Rough storage is expected to remain offline until October, when colder weather is expected to drive spot prices a little higher.
LNG send-out from Britain’s terminals remained steady at 8 mcm/d, with two new LNG tanker deliveries expected to arrive in Britain over the next couple of weeks.
Winter 2019/20 gas prices fell 3.7% lower week-on-week to 46.40 p/therm, as ongoing injections into gas storage means that stockpiles across the EU region has now reached 91% of capacity. Last year, gas stockpiles didn’t reach this level until late-October.
National Grid is forecasting the UK to have plenty of supply during the coldest winter months when peak demand is highest.
Europe continues to invest in new LNG terminals as it looks to phase out coal-fired plants and nuclear power, and increase its supply options for natural gas. Germany, Europe’s largest gas importer, is expected to add four terminals to import LNG over the next four years. The decision will open up a large market for American and Gulf Coast exporters.
|£/MWh||16 Aug 19||23 Aug 19||Change|
Day-Ahead power prices jumped 38.2% to £38.49/MWh, as lower wind output and hot temperatures across the UK Northwest Europe prompted an increase in demand for air conditioning.
Winter 2019/20 power prices lost 3.3% to £51.64/MWh, tracking similar movement in the corresponding UK seasonal gas price.
The falling cost of carbon prices is also key in reducing the cost of burning both gas and coal for power production during the winter season.
Germany’s power market has been a big beneficiary of this decline in carbon pricing as coal and lignite remains a significant portion of its overall fuel mix. Falling German pricing can often drive UK power prices lower.
UK POWER BASELOAD
|$/bbl||16 Aug 19||23 Aug 19||Change|
|Brent Crude Oct 19||58.64||59.34||1.2%|
Brent crude oil prices recorded a modest gain of 1.2% week-on-week to $59.34/bbl, after industry data showed a larger-than-expected drop in U.S. crude inventories.
Tensions in the Middle East remained in the spotlight as U.S. Secretary of State Mike Pompeo said the United States would take every action it can to prevent an Iranian tanker in the Mediterranean from delivering oil to Syria in contravention of US sanctions.
Oil prices were also supported by data showing lower exports in June from Saudi Arabia, the world’s top oil exporter.
However, lingering worries about a possible global recession capped price gains.
BRENT CRUDE OIL – MONTH-AHEAD
|£/$||16 Aug 19||23 Aug 19||Change|
The Pound Sterling rose in value versus both the US dollar and euro as German Chancellor Angela Merkel has given UK Prime Minister Boris Johnson 30 days to find an acceptable alternative to the controversial Irish Backstop.
U.S. and Asian stock markets tumbled over the last week after a sharp escalation in the U.S.-China trade war rattled investors. On Friday, US President Donald Trump announced tariff hikes on effectively all Chinese imports to the US. It came after Beijing said it would impose fresh duties and raise tariffs on US imports into China. This tit-for-tat escalation shows how unlikely a trade deal and de-escalation have become.
EXCHANGE RATE – GBP/USD (£/$)
Hunterston B4 nuclear reactor to restart after nuclear regulator declared safe
Britain’s nuclear watchdog, the Office for Nuclear Regulation (ONR), has agreed to allow EDF Energy’s Hunterston B4 nuclear reactors to restart, one year after it was shut down to investigate cracks in its graphite core.
The regulator will allow the reactor to run for four months after proving that the reactor cores can still fulfil their fundamental safety requirements, despite the cracks in its graphite bricks.
Donald Urquhart, the ONR deputy chief inspector, said the regulator had made the decision to give Hunterston B’s reactor 4 the green light after a “long and detailed assessment of the safety case” submitted by EDF Energy.
The energy company said it had spent more than £125m completing the “most extensive investigation of the reactor core that has ever been undertaken” to prove the Hunterston plant’s safety.
|Power Station||Type||Capacity (MWe)||Expected Closure Date|
|Hinkley Point B||AGR||840||2023|
Source: EDF Energy
The reactor was shut down last March after investigators discovered more than expected cracks in the graphite core of reactor 4 and reactor 3 at the Scottish nuclear plant. Its application to restart reactor 3, which was found to have more than 350 hairline cracks in its graphite core, is still pending.
EDF Energy had expected to restart the reactors in November but was forced to delay until the end of April this year. The energy company hopes to be powering homes by the end of August. EDF Energy hopes to run the Hunterston nuclear plant until 2023.
EDF owns and operates all of the UK’s existing nuclear power plants, which provide about a fifth of the UK’s electricity. It is hoping to extend the reactors’ expected running lives and build new nuclear plants at the Hinkley Point C and Sizewell B nuclear sites.
The company said in 2016 it would extend the lives of its Heysham 1 and Hartlepool nuclear plants, which were due to close this year but will continue to run until 2024. The closure dates of the Heysham 2 and Torness nuclear plants will both be delayed by seven years to 2030.
MPs recommends DSRs given 15-year Capacity Market contracts
Demand Side Response (DSR) providers should be allowed to bid for 15-year Capacity Market agreements in line with generation and distribution network operators should commit to being ready to run local grids on zero carbon sources by 2025, say MPs.
Those calls from the Science and Technology Committee were among several recommendations outlined in a new report urging serious policy action if the government intends to honour laws passed to decarbonise the economy.
The Committee also wants to see:
Controversially, the committee also called for “Ofgem to be prepared to recover the costs of incomplete smart meter deployment from the suppliers of those consumers who do not have smart meters.”
Even though legislation makes clear that consumers do not have to have a smart meter, that effectively means charging consumers that do not have one.
The report, while perhaps confusing coal free generation with zero carbon generation, called for distribution network operators to follow National Grid’s commitment to be able to run the power system – when possible – on zero carbon sources by 2025.
The implications for distributed thermal generation exporting to grid in that scenario – such as gas engines and combined heat and power – could be profound.
As well as calling for DSR to be eligible to bid for 15-year Capacity Market agreements, the Committee recommended setting aside a minimum amount of funding set aside within the CM for low carbon technologies.
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