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

06 October, 2016

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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Tara Sabanandan
Marketing Manager, ICIS

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