Power and gas prices at nine-year low
Business Energy Market Brief - Mar16
Most seasonal UK power and gas prices continued to fall in February, despite a boost in oil prices.
Seasonal gas contracts remained at their lowest levels since 2007, as a strong UK gas supply outlook offset rising oil prices. Total’s £3.3bn Laggan-Tormore gas project has entered production, and once operational the fields are expected to produce enough gas to supply 8% of the UK’s total consumption.
In addition, LNG delivery to the UK is already at a five-year high this winter. Summer 16 gas dropped 4.7% to average 28.0p/th.
Seasonal power contracts showed diverging trends. Summer contracts followed gas and coal markets lower, while winter contracts were supported by tightening supply margins following the likely closure of multiple coal-fired power stations. The summer 16 power contract fell 4.8% to average £31.5/MWh, but winter 16 power gained 1.9% to £37.9/MWh.