Gas flows improve, wind increases and National Grid reveals desire for a ‘Virtual System’

Market Pulse

Bearish moves with increased gas flows into Europe

After a delay in increased gas flows from Russia that were expected Monday 8th November, they began increasing from Tuesday 9th. Following this, large bearish moves were made across the whole curve in both the power and gas markets as storage levels throughout Europe are gradually being replenished We don’t know whether these increased flows will continue after November, the uncertainty has therefore caused upwards movements at the back end of this week, with Winter 2021 now trading at £183.00/MWh – Earlier in the week Winter Baseload 2021 dropped down to £169.50/MWh. Looking ahead to December 2021 and Q1 2022, when temperatures are likely to drop significantly in Russia, it is unclear whether the levels will drop down again for Europe as priorities may shift. Commentators suggest that this would cause prices to increase across the market again as demand across Europe will also be high as the temperature drops – it is all speculation at the moment. 

Strong but uncertain winds

Wind levels have remained strong over the past week, which has also helped enhance the bearish moves in the market. An average of 7.8GW of wind has been generated and supplied, slightly below the previous week’s average, but still healthy and it covered just over 25% of the UK’s demand. Although the wind has been strong recently, it is due to drop off over the weekend and into next week. The weather patterns, of late, have been very unpredictable for temperature and wind generation, this has provided some uncertainty to the market.

National Grid’s desire for a ‘Virtual Energy System’

National Grid is on a mission to ‘decarbonise the energy system and bridge the gap to net zero’, with this they have announced that they are launching a plan to create an industry-wide digitisation to the energy system. This will be called the virtual energy system, a digital replica of the entire physical energy network. They are asking for all industry stakeholders to get involved and support through knowledge sharing and investment. The system will be developed and expanded over time to include all physical components. This ‘virtual network’ will assist in making more informed and agile decisions across the whole grid by collecting and sharing real-time data. This will give the industry granular insight on how energy is generated, managed, stored and consumed.