UK power for delivery over the weekend was trading at a ten-year high early on Friday, driven by the cost of firing up gas-fuelled power plants to meet demand amid very high UK gas prices.
ICIS assessed the UK power Weekend Baseload product at £80.00/MWh at Thursday’s close.
This was roughly double the average power price for a weekend seen throughout 2017.
In early trade on Friday the same product had softened marginally to change hands at £77.00/MWh, but this remained comfortably the highest Weekend Baseload price since sharp price spikes were seen way back in 2008.
The highest single Weekend transaction seen on Thursday was for £81.00/MWh.
While electricity supply margins have been relatively comfortable throughout the extreme late-winter cold snap, the spiky power price is being driven by the cost of fuel to run gas-fired power plants.
Gas plants have occupied a marginal position in the UK power mix throughout the cold snap, meaning they ramp up and down to meet peaks and troughs in demand.
This has been driven by the sharp rise of wholesale gas prices which meant gas plants became more expensive to run than coal-fired plants. So while virtually all coal plants available to the power system have been running, gas plants have remained marginal.
The UK has seen vast amounts of wind power since the arrival of Storm Emma, which have supported the overall power system and kept supply margins well in check.
But wind power output is expected to fall back over the weekend, which will pull more expensive gas plants into the mix, and power prices have been forced higher to compensate. firstname.lastname@example.org
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