Weekly Market Update - Coal plants on standby as UK experiences a snap of freezing temperatures

Head of Sales Trading, Fanos Shiamishis reports on the energy market activity, covering the period 6th - 13th December 2022. On our end of day pricing tool, the Source, we published an in week high of £323.50/MWh for the Summer-23 seasonal power price on 7th December with the price decreasing to £301.34/MWh yesterday. In this blog Fanos shares the market news and updates from the last week.     

Last week, UK and European gas traded within a tight range as colder weather expectations were outweighed by strong LNG supplies and comfortable storage levels. The UK system was in a surplus of gas supplies on the back of a higher Norwegian flow and BBL gas pipeline between the Netherlands. 

On 7th December, Norwegian flow to the UK was down and the unplanned outage at Karstro plant in Norway was extended until 16th December. Strong NBP amid higher demand and N2EX Day Ahead outturn was highest this month at £364.21/MWh.  

On 8th December, European gas prices rose on plunging temperatures across the continent and a drop in wind power generation. Uniper has delayed the commission of the Wilhemshaven floating LNG terminal to 22nd December.  

With very low liquidity on UK Power, the front season remains the most traded contract however, less than 200MW exchanged hands today across the whole UK power curve. French capacity market prices have surged 33% from last October, reaching the €60,000/MW ceiling for 2023 certificates. 

Last week ended with the UK gas system opening 4mcm undersupplied with demand increasing a bit more than the slight increase in Norwegian flows.  Despite the UK gas system opening 7mcm short yesterday, an unplanned Interconnector UK outage curtailed UK exports to Belgium for today leading to lower UK prices. Forecasted gas demand in the UK out to 25th December has reverted to higher than seasonal expectations but is expected to sharply revert to below average by month end into the new year.  National Grid did warm two coal fired units but cancelled them as standby few hours later with high nuclear and wind generation output covering UK system demand.