Weekly UK Insight - 4 February 2019


p/therm 25 Jan 19 1 Feb 19 Change
Day-Ahead (DA) 55.20 50.10 -9.2%
Mar 2019 54.21 50.07 -7.6%
Summer 2019 50.76 48.29 -4.9%
Winter 2019/20 61.10 59.98 -1.8%

Source: Reuters

The UK’s Day-Ahead gas price fell 9.2% to 50.10 p/therm reflecting an oversupplied gas system as a result of strong pipeline flows and greater LNG deliveries.

High imports from Continental Europe saw both Dutch BBL and Norwegian Langeled pipelines flowing close to 100% of capacity, contributing to the well-supplied UK gas system.

Gas storage operators are also forecasting heavy Medium Range Storage withdrawals today, close to 39 mcm/d.

Six LNG tankers are scheduled to arrive at UK terminals over the next two weeks, supplying Britain’s gas network during early February. Total LNG send-out is expected at 61 mcm/d from all UK terminals.

Despite a slight increase in temperatures, National Grid’s forecast gas demand is expected at 335 mcm/d today, higher that the seasonal normal demand of 289 mcm/d.

Summer 2019 gas prices slid 4.9% to 48.29 p/therm reflecting losses in European gas, power and carbon prices, as well as lower concerns of major nuclear outages across Northwest Europe.

The return of several nuclear plants across France and Belgium will reduce the demand for gas to be used in power production over the coming months.

The increase in LNG imports is a strong signal of the new supply coming online in the global market.


Weekly UK Insight 4 February 2019
Source: Reuters


£/MWh 25 Jan 19 1 Feb 19 Change
Day-Ahead (DA) 54.03 54.04 0.0%
Mar 2019 56.36 53.09 -5.8%
Summer 2019 53.82 51.56 -4.2%
Winter 2019/20 61.10 59.79 -2.1%

Source: Reuters

Day-Ahead power prices was little changed at £54.04/MWh.

Summer 2019 power prices declined 4.2% to £51.56/MWh, as longer-term concerns over European nuclear outages were eased as power production at France’s 1.3GW Flamanville 1 nuclear plant ramped up following a nine-month outage. Belgium’s 433MW Doel 2 nuclear reactor is also expected to restart production on 4th Feb, reducing demand for UK power during peak times.


Weekly UK Insight 4 February 2019
Source: Reuters


$/bbl 25 Jan 19 1 Feb 19 Change
Brent Crude Apr 19 61.64 62.75 1.8%

Source: Reuters

Brent crude oil prices rose 1.8% to $62.75/bbl last week, their highest so far this year as OPEC-led supply cuts and U.S. sanctions against Venezuela’s petroleum industry tightened markets.

OPEC oil supply fell in January by the largest quantity in two years. OPEC output was 30.98 million bpd, down 890,000 bpd month-on-month. The consortium is almost three quarters of the way in delivering supply cuts that started on 1st Jan, even though Iraq and some smaller OPEC members pumped above agreed levels.


Weekly UK Insight 4 February 2019
Source: Reuters

Exchange Rates & Economics

£/$ 25 Jan 19 1 Feb 19 Change
GBP/USD 1.3201 1.3083 -0.9%

Source: Reuters

The value of the Pound Sterling declined versus the U.S. dollar after weak data from Britain’s manufacturers sparked recession fears for the sector.

Markit’s purchasing managers index (PMI), a measure of future growth expectations, missed market forecasts for the manufacturing sector. The PMI, released on Friday morning, came in at 52.8, against a forecast of 53.5. Anything above 50 signals economic growth, while below means contraction. The PMI data showed that any boost from manufacturers stockpiling parts ahead of a potential no-deal Brexit had now passed.


Weekly UK Insight 4 February 2019
Source: Reuters

Regulatory and Market News

Corporate PPAs double in 2018 as mid-market buyers emerge

Large corporations bought more than double the amount of renewable power from generators via Power Purchase Agreements (PPAs) in 2018 than in 2017, according to data compiled by Bloomberg New Energy Finance (BNEF).

BNEF’s analysis suggests 13.4GW was bought by 121 corporates via PPAs in 2018 versus 6.1GW in 2017. Additionally, those figures excludes some types of PPAs in some countries.

BNEF suggested PPA growth is set to continue markedly, especially where corporates have committed to procure clean power through initiatives such as RE100.

It estimates signatories to that initiative alone will need to fund around 102GW of new solar and wind projects globally to meet their 2030 commitments.

BNEF said the emergence of smaller, first time PPA corporate buyers marked a new trend. Many used an aggregation model, partnering with larger buyers or ‘anchor tenants’ to benefit from economies of scale, stronger balance sheets and legal and financial expertise.

In a post-subsidy world, utilities and developers need PPAs in order to finance projects. Some are starting to look further down the food chain, offering shorter-term deals for smaller volumes of power in order to build onshore wind farms and solar parks.

Vattenfall recently touted PPAs as small as 1MW/3GWh per annum in a bid to finance its South Kyle Wind Farm in South West Scotland.

However, offshore wind is unlikely to survive on corporate PPAs alone and will require support for some time yet.

LINK: BNEF – PPAs double in 2018

Haven Power and GridBeyond agree Demand Side Response deal, targeting I&C flexibility

Business energy supplier Haven Power has struck a demand-side response deal with GridBeyond. The two will work to unlock flexibility within Haven’s customer-base, bidding flexible megawatts into traditional demand-side response tenders run by National Grid as well as into wholesale markets.

The aim is to maximise returns from onsite generation or flexible consumption. Demand-side flexibility will ultimately also help Haven Power’s parent company, Drax, to balance its market position as it expands beyond thermal generation.

GridBeyond UK managing director, Wayne Muncaster, said the deal underlined changing dynamics in the demand-side response market as suppliers acquire or partner with DSR specialists to capture the value of flexibility as it moves between markets and contracted products.

The arrangement with Haven follows a recent deal with Electricity North West’s commercial arm, whereby GridBeyond hopes to sell DSR services to ENW Construction and Maintenance’s high and medium voltage customers. Muncaster said the firm is in negotiations with other energy companies and hopes to announce further partnerships in the coming weeks.

LINK: Haven Power – DSR partnership with GridBeyond


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