Rally in wholesale prices welcome news for generators

It’s been a busy time on the energy markets since the first SmartestEnergy Informer Series webinar for generators was staged back in February. In the latest webinar, Head of Pricing Gavin Baker looked at what has been happening to wholesale prices.  

After what had been a long spell of energy prices heading south, the last few weeks will have come as something of a relief to generators.
Since our webinar in February, wholesale prices have been staging a rally on the back of a number of factors.

As well as the impact of the partial recovery seen in the oil price, energy prices also received a boost after gas flows from Norway, the largest foreign supplier of gas to the UK, were hit by maintenance work and the shutdown of some infrastructure. The French government’s confirmation of plans to implement a carbon floor also had the effect of lifting power prices across Europe.

Although volatility has continued to be high on the wholesale market, the broad trend in the last few weeks has been firmly upwards. Back in February, the annual forward baseload contract price was well below £35 per MWh and at times was getting close to £30 per MWh but since then has risen back above £40MWh.

In the latest webinar we also take a look at how prices are shaping up for the upcoming winter and for Summer 2017.

As well as rising prices, one interesting trend being seen on the wholesale market is how prices at certain times are being affected by increasing solar capacity on the grid.

During peak solar output period during the day, wholesale prices are being pushed down quite significantly.

There’s quite a bit of discussion within the industry at the moment around using battery storage to enable solar generation to benefit from better pricing and that is definitely an area to keep an eye on.

Other issues for generators discussed during the latest webinar include forecasts for FiT CfDs and whether the announcement of the Triad periods for last winter provides any pointers to help generators benefit during the upcoming one.

To watch the wholesale section from our latest webinar in June click the video below