An award win, high Day Ahead & BM prices and EUA’s break through the €70/mt

Market Pulse

Low pressure system results in high Day Ahead and Balancing Mechanism prices

The week has been shaped by a low pressure weather system that drifted over the UK from Monday to Wednesday. As a result,  the wind dropped from 8GW, which is fairly normal for this time of year, to below 3GW and low temperatures. Given how the market has responded to any slight drop off in wind since September, it came as no surprise to see the market react bullishly. Day ahead prices peaked at £925/MWh during the evening on Tuesday, with winds below 4GW at this time, but the system remained well balanced throughout the day so the market experienced suppressed intraday prices. 

Source: LCP Energy

Thursday experienced slightly reduced Day Ahead prices at £609.50/MWh, however, system prices spiked above £3,130/MWh for two settlement periods as the system flipped short, whilst Coal plants and CCGT’s were accepted in the Balancing Mechanism at up to £4,000/MWh. What makes Wednesday 24th particularly interesting is that it is the most expensive day in the UK Balancing Mechanism on record, in terms of total net cost of bids and offers. This means that the top 10 most expensive days have occurred since September 2021, despite the reasonably high levels of nuclear availability and still 4GW’s of wind. It seems that the volatility we have experienced so far this year is going nowhere this winter.

UKA (£/mt)

Low winds and low temperatures continue bullish forward market charge – EUA’s break through the €70/mt

The market experienced an initial drop across both power and gas over the weekend, as a result of recent European Covid surges and lockdowns resulting in forecasts of reduced demand. However, with low winds and low temperatures, gas and power prices continued on their bullish charge. Continued uncertainty around Nord Stream 2 is continuing to add upward pressure. Following the German Energy regulator ‘pausing’ the commissioning of this pipeline, the market is now pricing it to begin as late as Q3 2022, as opposed to earlier optimistic views of ‘late this year’. However, recent European lockdowns and the recent discovery of a new strain of COVID in Southern Africa spooked the market towards the end of the week, resulting in a slight drop off in gas prices.

UK Baseload Q121 prices have increased by £36/MWh and currently sit at £251.50/MWh. NBP Q121 increased by 27.50p/therm, but has only made a partial recovery from last week, trading at 231p/therm at the time of writing. Carbon prices have had a particularly interesting week with a bit of an unrelenting charge accumulating with European Allowance’s (EUA’s) breaking through the €70/mt mark (for the first time). This is a result of the new German government calling for a floor price of €60/mt to speed up their energy transition. UKA’s have also increased throughout the week, due to market speculation surrounding the liquidation of Bulb and general bullish fundamentals mentioned earlier. With regards to Bulb, if the administrator comes in and looks to hedge both power and carbon quickly, then this may put a lot of upwards pressure on UKA’s. The UKA continues to trade above the EUA’s, with a premium of £4.80/mt.

Limejump win prestigious award!

On Wednesday night, Limejump took home the coveted ‘Utility Scale Storage Project of the Year’ Award at this year’s Solar Storage Live Awards …and we have only just come down from the ceiling.

We won the award for our ‘first of its kind’ optimisation services on Europe’s largest battery – Minety. The 100MW battery has only been in operation for a short amount of time but has already delivered on behalf of its owner, Penso Power Limited, and supported the grid with much needed real-time flexibility. We are very excited about the future of intelligent battery optimisation and look forward to continuing to innovate in this space.