Energy Market Report - Aug18
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Energy Market ReportsEnergy Market Report - Aug18

Energy Market Report - Aug18

Ian Mckenna

by Ian Mckenna 07 August 2018

Report Summary:

Wholesale prices rise on low wind amid heatwave

key-market-indicatorsEnergy Market Brief - Aug18

Wholesale power and gas prices rose across the board in July, with many contracts rising for a fifth consecutive month.

Day-ahead power prices grew 6.3% in July to average £57.6/MWh. Prices peaked at £59.5/MWh on 17 July amid lower renewables output caused by the ongoing heatwave.

This has seen wind generation drop from 1.7TWh in June to less than 1.3TWh in July, its lowest monthly output in two years, meaning more expensive forms of generation are required to meet demand. All seasonal power contracts rose in July, up 3.7% on average. Summer 19 and winter 19 experienced the largest change, both gaining 4.7% to £51.0/MWh and £57.0/MWh respectively.

Day-ahead gas rose 4.0% to average 57.7p/th, supported by higher demand for power generation across Europe and high LNG prices. Prices increased from 54.6p/th at the start of July to a peak of 60.0p/th, amid reduced Norwegian gas flows on 10 July.

All seasonal gas contracts lifted in July, gaining 5.1% on average. Winter 18 gas saw the least change, up 2.5% to average 64.2p/th. Summer 19 saw the greatest change, rising 6.3% to average 51.4p/th. A combination of short-term factors including low renewables output and high gas for power demand across Europe have fed through to longer-term gas contracts.