Wholesale gas and power prices rise in Q3 2016 with UK supply concerns



The ICIS Power Index Q3 2016 analysis shows UK energy values rising at the strongest rate in five years

London, UK, 6th October 2016 – Wholesale UK electricity and gas prices have been lifted by concerns over tighter supply margins, according to analysis of the energy markets published by ICIS, the independent authority on energy market pricing.

UK electricity prices were lifted at the end of the quarter in particular by concerns over potential power supply shortages in the UK and France for winter 2016. This in turn raised gas prices, in the expectation of more demand for gas as fuel for electricity generation.

The ICIS Power Index (IPI) rose to 17-month highs at the end of the third quarter. Quarterly average prices for both gas and power were also up by 13% from Q2 – the most pronounced quarter-on-quarter gain since 2010. The ICIS Power Index (IPI) averaged £43.06 per megawatt-hour (MWh) over Q3, while gas to be delivered the following year averaged 40.98 pence per therm (p/th).

‘The record highs in UK short-term prices in September, and then subsequent concerns over levels of French imports this winter, show the market’s concern over the tight supply margin, which boosted long-term prices in the third quarter,’ says Zoe Double, Head of Power at ICIS. ‘Looking ahead to future winters, this margin is expected to improve, but strong demand or supply disruption in the next six months could continue to make traders nervous.’

‘Initial concerns over whether the UK has enough gas in storage have eased, as the UK has other sources of supply to draw on for the coming winter,’ says Ben Wetherall, Head of Gas at ICIS. ‘Britain is in a good position to take advantage of global gas market oversupply, which will help to meet the stronger demand for gas for generation.’ The ICIS Power Index delivers independent insight into the complex world of wholesale power prices for both households and industrial electricity consumers, based on real market trading.

The ICIS Power Index is updated every working day and is freely available from the ICIS website, along with ICIS’ quarterly analysis of price trends and volumes.

The ICIS Power Index is updated every working day and is freely available from the ICIS website, along with ICIS’ analysis of price trends and volumes during Q1 2016.

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About ICIS

ICIS is an independent price reporting agency focusing on global energy, petrochemical and fertilizer markets, and we have covered the complex UK electricity market for nearly two decades. Every day, we assess electricity contracts for more than 40 different delivery periods in the UK market alone. The analysis and data that we produce is widely used as a reference price in energy contracts.

It is our aim to give companies in global commodities markets a competitive advantage by delivering trusted pricing data, high-value news, analysis and independent consulting, enabling our customers to make better-informed trading and planning decisions.

With a global staff of more than 800, ICIS has employees based in Houston, Washington, New York, London, Montpellier, Dusseldorf, Karlsruhe, Milan, Mumbai, Singapore, Guangzhou, Beijing, Shanghai, Yantai, Tokyo and Perth. ICIS is a division of Reed Business Information, part of Reed Elsevier Plc.

About Reed Business Information

At Reed Business Information we provide information and online data services to business professionals worldwide. Customers have access to our high-value industry data, analytics, information and tools. Our strong global brands hold market-leading positions across a wide range of industry sectors including banking, petrochemicals and aviation where we help customers make key strategic decisions every day. RBI is part of Reed Elsevier, a leading global provider of data, information and solutions for professional customers.

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ICIS Power Index (IPI)

The IPI is published daily by ICIS, an independent authority on UK electricity market pricing, and is available at no charge.

The latest published index, volumes, number of trades and related data can be downloaded for free.

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European Spot Gas Markets (ESGM)

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This addition complements the ESGM coverage of Europe’s most active traded gas markets, including Britain, further providing transparency to wholesale gas trade in the region.

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