The ICIS Power Index Q3 analysis shows falling prices, but supply risks are still present in the market ahead of winter.
Wholesale UK gas and electricity market prices have fallen ahead of winter, but supply risks remain, according to analysis of the energy markets published by ICIS, the independent authority on energy market pricing.
UK power prices have continued to decline in the last three months, reaching their lowest quarterly average price since 2010 at £42.86/MWh. The ICIS Power Index finished Q3 down 19% from the same time last year, despite the tightest generation supply margin for the coming winter in a decade.
Meanwhile gas prices for delivery in the next year have averaged their lowest for a quarter since 2010, at 43.095p/th. The gas price finished September down 29% from the same time last year, at 40.713p/th. The price has fallen in spite of the UK holding less gas in storage than for the previous winter.
“The energy markets respond very effectively to changes in supply and demand, and the weaker macroeconomic situation has had a strong influence, bringing down wholesale prices,” says Zoe Double, Head of Power at ICIS. “Both gas and power margins are still tighter than last year, when prices were higher, but the markets are now more comfortable that supply disruption can be dealt with.”
“Fuels are cheaper and supply concerns have generally eased in the last few months,” says Ben Wetherall, Head of Gas at ICIS. “But unusually high demand, along with unexpected events or outages, could cause prices to spike during the winter.”
The ICIS Power Index Q3 analysis shows how energy prices have moved over the last three months. But the UK power system faces its tightest supply margin in a decade during winter this year, so ICIS has also published a white paper ‘The UK Energy Market – Fit for this Winter?’, as an in-depth analysis of the outlook for UK energy markets as a whole, examining supply and demand fundamentals and the risk factors for prices ahead of the colder weather.
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’ analysis of price trends and volumes during Q3 2015, and ICIS’ specialist analysis, including its white paper ‘The UK Energy Market – Fit for this Winter?’, published in response to the increased scrutiny of supply risks in colder weather.Find out more about the (IPI)
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