Unprecedented volatility and Limejump pass big milestone

Market Pulse

Adam Burton  avatar
Adam Burton
EUA Carbon Price

Unprecedented volatility within the forward power market

This week began in line with recent trends. We witnessed another increase in gas prices on Monday, due to a combination of pipeline maintenance, higher LNG prices in Asia (resulting in a lack of inbound supply), low storage levels and a reduced pipeline supply. These factors resulted in another record breaking price of 98.20p/therm. With higher gas prices, a boost for both carbon prices and power prices followed. On Tuesday, Winter Baseload 21 began trading at £99.80/MWh with the expectation that this would break through the £100/MWh mark. However, despite all technical analysis suggesting a bullish market, there was a major sell off across the board. Winter 21 Baseload power prices fell 8.1% on Tuesday alone, whilst the EUA’s carbon price fell 12% by Wednesday. These were driven by gas prices plummeting, with front month prices dropping 15% by close of play on Wednesday as well.

As mentioned, there are seemingly no technical drivers for this price plummet, instead it is sentiment, investor driven. There have been suggestions that the LNG picture could be improving in the UK soon whilst others have speculated that the USA may withdraw their threat of sanctions on the Nord Stream 2 pipeline, both of which would lead to increases in supply of gas, but, neither of these are confirmed. In what has already been a remarkable year in the forward market, this may have been the most remarkable and unpredictable couple of days yet. Coming to the end of the week there has been a slight rebound of these prices but they are still considerably below last week’s benchmark.

Limejump reaches a new milestone!

Since the start of the year, Limejump’s power platform has grown 25% and for the first time, since the company was established in 2013, it has passed 1.5GW of capacity. If operating at full capacity, this 1.5GW has the ability to power almost 3.5 million homes!
Genna Boyle, Limejump’s Head of Renewables and Flexibility commenting on the market this year said: “Since January, the forward power market has grown unlike any other year in recent history, from £58/MWh to £98/MWh. The bullish momentum that we have seen in power prices this year has been predominantly driven by tight gas and carbon markets as well as an ever-changing UK power generation stack.”

Catherine Newman, Limejump’s Chief Executive: “We have had a great first half of the year. Our team has worked closely with renewable generators across the UK to enable them to take advantage of volatility in the energy markets. We have improved our operational performance further and our business has continued to grow.”

Outlook for next week

The weekend is forecast to have very low levels of wind, however they should return to normal levels by the next week. Temperatures are remaining stagnant, sat on seasonal norms whilst solar generation will be marginally lower than average due to continued overcast conditions. There are availability improvements in Biomass, CCGT and Nuclear availability by 100MW, 150MW and 500MW respectively so the system continues to have a healthy generation stack despite low renewable output.