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UK power prices deliver at new record high

  • Spanish Market: Electricity
  • 06/09/21

The UK day-ahead power markets cleared at a record high for delivery today amid forecasts for low wind output and limited plant and interconnector availability, along with demand beginning to rise again following the end of the holiday period.

The UK N2EX was at £219.46/MWh for base load on Monday, surpassing the previous high of £198.79/MWh in January. Hourly prices hit a high of £722.94/MWh but were below the record of just less than £1,500/MWh at the start of this year.

Wind generation was forecast at below 1.5GW throughout the day, with lows of about 800MW expected. And realised wind power generation has been even lower than forecast, at 400-600MW for most of the morning.

Availability on the 2GW IFA interconnector with France is scheduled to be reduced to 1.5GW until 10 September and then to 1GW from 10-17 September.

Combined-cycle gas turbine (CCGT) availability has been low since the start of this month, although units have steadily come back on line in recent days, with more scheduled to end shutdowns today. The 810MW Seabank 1 plant and 1.4GW South Humber Bank facility both are scheduled to return to service this afternoon.

System prices have been up to £283.65/MWh so far today, with the potential to rise again in the evening as demand picks back up. Loss-of-load probability forecasts remain above zero for the evening peak-demand hours, with de-rated margins below 3GW, National Grid ESO data show.

Early this morning, units at EdF's West Burton A coal-fired plant were accepted into the balancing mechanism with offers of up to £3,950/MWh, while Uniper's Grain 6 combined-heat-and-power plant was accepted at £4,950/MWh.

West Burton A's start-up this morning has brought coal-fired generation to above 1.5GW for the first time since March.

Demand began to rise again at the start of September as the holiday period comes to an end. Transmission system demand was forecast to average 28.2GW and peak at 33.8GW today, compared with August when demand averaged 25.7GW and peaked at 33.2GW. Low output from embedded wind also supports demand in the transmission system.

Demand in August was up by just 0.8pc on the year, down from increases of 2.2pc in July and 12.3pc in the second quarter. The holiday period will have suppressed demand, while temperatures were also below the long-term average for most of that month. And increasing supply chain disruption in many industries may have also hit demand recovery in the past two months.

Higher wind and the return of some CCGT and nuclear units could keep price spikes lower during the rest of this week. But the system is expected to remain tight — if less so than today — and high gas and emissions prices will continue to provide support.

The 1.2GW Heysham 1 nuclear plant is scheduled to return from maintenance this week, although the plant's shutdown has been extended several times since it went off line in mid-July.


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07/11/24

German government collapse could delay energy policies

German government collapse could delay energy policies

London, 7 November (Argus) — The collapse of the German coalition government may delay critical energy security policies currently under discussion, with industry and power associations expressing concerns about potential political standstill on such issues in the coming months. Asked in Berlin on Thursday, energy minister Robert Habeck said he does not expect a general agreement between the remaining red-green government and the conservative Union, which would ensure all further projects in this parliamentary period. And "it remains to be seen" if some decisions could be made together with the opposition on a case-by-case basis where the interests of government and CDU align, Habeck said, although energy security could be one topic where bills could be passed during the minority government phase before the end of this year. CDU politicians including on the state level had "constantly" written him letters to ask when some laws would "finally" be passed, he said, highlighting that while he does not expect "a great deal of helpfulness" he hopes the opposition will work with the government on the basis of how beneficial planning security would be for Germany as a whole. Among the energy security laws waiting to be passed is the draft law that abolishes the German gas storage levy on cross-border interconnection points , while the government has not yet passed its power plant strategy nor submitted the second of its two planned "solar packages". Chancellor Olaf Scholz on Wednesday said that among the legislative projects he was trying to pass before the end of the year were "immediate measures for our industry" on which he was currently deliberating with "companies, unions and associations". He said he would quickly try to begin speaking to opposition leader Friedrich Merz around the questions of defence and economic stability, since the economic stabilisation "cannot wait until elections have taken place". The coalition government collapsed after Scholz sacked finance minister Christian Linder , leading the latter to withdraw his party from the ruling coalition. An election looks likely in early 2025. Industry and renewables associations in particular voiced concerns about the timing of the collapse and potential political stagnation, with general leader of chemicals association VCI calling for elections at "the earliest possible time" to avoid "stalemate and political standstill", while the federation of German industries BDI said the country needs a "new, effective government" with a parliamentary majority "as quickly as possible". VCI stressed that Germany needs low energy prices, faster permitting and less bureaucracy, while BDI highlighted that existing market uncertainty is likely to rise with the arrival of the new US administration at the beginning of 2025, when Scholz plans to hold a vote of confidence. And wind association BWE stated that the country "cannot afford to stand still", while solar power association BSW appealed to members of the Bundestag to "make decisions and compromise" on important energy policy issues across party lines. Renewables association BEE called for laws and budget funds already in process for the continuity of energy measures to be adopted by December, stating that "even in a political crisis" the country "cannot afford" stagnation and stalemates. Conservative opposition sister parties CDU and CSU have been polling well ahead across 2024 at around 30-33pc of the vote. While the parties agree with the ruling coalition on several aspects of energy policy — including supporting hydrogen-fired and climate-neutral gas-fired generation — they notably diverge on the topic of nuclear generation. Germany completed its long-awaited nuclear phase-out in April 2023, but the CDU/CSU this week announced it would conduct an investigation into whether the last plants to be decommissioned could feasibly be reactivated. The CDU/CSU also reiterated its support for the development of fourth and fifth-generation nuclear reactors. Nuclear plants are notorious for lengthy construction times, meaning a single parliamentary term may not be enough to see projects through without cross-party support, and the ruling Greens and SPD remain anti-nuclear. The country has also not yet decided on a final storage location for its existing nuclear waste, which will need to be stored there for "one million years", according to the final report from the commission for the storage of highly radioactive waste. But the CDU and SPD have both voiced support for the introduction of a national green gas sales quota , with the CDU/CSU this week highlighting green gas quotas in the gas grid as a way to leverage the market to reach climate goals. By Till Stehr and Helen Senior Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Trump victory raises climate law questions


06/11/24
06/11/24

Trump victory raises climate law questions

Houston, 6 November (Argus) — Federal tax incentives enacted through US President Joe Biden's signature 2022 climate law could survive in some fashion during a second Donald Trump administration, but their ultimate fate could depend on a Republican majority in Congress. While details of president-elect Trump's plans will unfold in the coming months, the Inflation Reduction Act (IRA), which established tax incentives for clean electricity and the related supply chain, is very much up for review, according to panelists during a post-election webinar hosted by US law firm Bracewell. Beyond the presumed policy shift, the Biden administration is still working to finalize guidance for some of the IRA's incentives, such as production and investment tax credits for clean energy, and regulators have yet to outline other provisions in the law beyond cursory notices. The confluence of those factors could chill renewable energy development, at least in the near term. "Investors stand the risk of being whipsawed to some degree in terms of not having the comfort they need to make a billion-dollar investments on new clean energy facilities," Bracewell tax policy lead Tim Urban said. In addition, an expected 2025 tax bill could move around several trillions of dollars, "and some of that bill could either end up being IRA fixes or IRA repeals or curtailments," he said. Much will depend on whether Republicans retain a majority in the House of Representatives, which would give them control of Congress after they regained a Senate majority on Tuesday. That would open the door for budget reconciliation — the same process through which Democrats passed the IRA in 2022 — and allow Republicans to make changes to the law with a simple majority vote rather than the 60 typically required to bypass the Senate's filibuster rules. In other words, Republicans would not have to reach across the aisle to compromise with Democrats. While some Republicans have objected to outright ending the IRA, they have not yet faced the "horse trading" and intraparty pressure that accompanies negotiations around major legislation, according to Urban. "I'm still optimistic that that much, if not all the IRA may be salvageable, but I think there's a lot of work to be done," he said. Project developers have signaled a similar outlook , noting that renewable energy expanded during the first Trump administration, despite investment in newer sectors like offshore wind flagging ahead of the 2024 election. Even for offshore wind, they expect a slower pace of development rather than a complete abandonment of the industry by the US. The biggest change could come from competing priorities, with Trump's policies potentially making the all-in cost of resources like natural gas more attractive than renewables. Even without details, Trump's desire to see oil and gas producers " drill, baby, drill ", and his first term in the Oval Office offer some broad insight into how his policies could manifest. "One hallmark of the first Trump administration was to not pick winners and losers on technologies or type of energy," said United States Energy Association chief executive Mark Menezes, who served as US deputy secretary of energy in 2020-21. That meant making sure nuclear could be treated equally with other sources and "renewables weren't forced on a particular group if they didn't want to have renewable power, for example," he said. The incoming administration is likely to pursue a "rather aggressive approach to fossil fuel expansion", with a raft of "immediate" executive orders to support that goal, according to Scott Segal, co-chair of Bracewell's policy resolution group. But the IRA will likely be handled with a "scalpel" rather than a "sledgehammer", he said. By Patrick Zemanek Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

EU expected to approve climate, energy commissioners


06/11/24
06/11/24

EU expected to approve climate, energy commissioners

Brussels, 6 November (Argus) — Former Danish climate minister Dan Jorgensen is expected to be confirmed late this month as EU energy and housing commissioner, having received clear support after his hearing in front of EU parliament members. Similarly, centre-right political support is expected to ensure a vote for reconfirmation of Wopke Hoekstra as climate commissioner. Jorgensen has received approval from the joint hearing committee, after his hearing yesterday. During the hearing, he promised a plan for affordable energy, a roadmap to end Russian energy imports, a clean energy investment plan and an electrification action plan. He focused on cost, noting the need to work towards lower energy prices in Europe and recognised nuclear energy as "part of the solution". But Jorgensen avoided giving detail on contentious issues, adding no precise date for an end to Russian energy imports. Although he backed a 2040 renewables target, he gave no approximate percentage share, or range, for renewables in final energy consumption by that date. German member Christian Ehler said his centre-right EPP group would "in the end" support Jorgensen following "reasonable" performance. Ehler wants the future commissioner's statements on hydrogen and related delegated acts, especially on low-carbon hydrogen, to be "concretised quickly". Industry group SolarPower Europe welcomed Jorgensen's clarity around not seeking fundamental changes to electricity market rules, but their proper implementation. A power industry source, though, pointed to his "other ideas" on specifics, notably on how to increase market liquidity . Documents prepared for the 7 November hearing of current climate commissioner Wopke Hoekstra give little concrete detail on revision of the bloc's emissions trading system (ETS). Hoekstra is expected to take a similarly cautious approach as that of designated EU agriculture commissioner Christophe Hansen on ETS integration to cut agriculture's 11pc share of EU greenhouse gas (GHG) emissions. But Hoekstra is expected to be more open about using the 2026 ETS review to lower thresholds for EU ETS inclusion from 2031, including for maritime shipping, bioenergy with carbon capture and storage (Beccs) and direct air capture with carbon storage (Daccs). The European Parliament is expected to vote on the new commissioners during its 25-28 November plenary in Strasbourg. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

UK parliament approves SAF mandate from 2025


06/11/24
06/11/24

UK parliament approves SAF mandate from 2025

London, 6 November (Argus) — The UK parliament has approved the proposed sustainable aviation fuel (SAF) mandate that will come into effect on 1 January, 2025. Obligated suppliers will have to deliver a 2pc share of SAF in 2025, increasing to 10pc in 2030, 15pc in 2035 and 22pc in 2040. The obligation will remain at 22pc from 2040 "until there is greater certainty regarding SAF supply". The obligation arises at the point at which a supplier's jet fuel can be supplied only to UK aviation. Hydrotreated esters and fatty acids (HEFA) SAF can be used to meet 100pc of SAF demand in 2025 and 2026, but will be capped at 71pc in 2030 and 35pc in 2040. An obligation for Power-to-Liquid (PtL) SAF will be introduced from 2028 at 0.2pc of total jet fuel demand, rising to 0.5pc in 2030 and 3.5pc in 2040. Buy-out mechanisms will be set at the equivalent of £4.70/l ($6.10/l) and £5.00/l ($6.50/l) for the main and PtL obligations, respectively. "It is projected that, between 2025 and 2040, the SAF mandate could deliver up to 25mn t of SAF, securing a saving of up to 54mn t of carbon dioxide", said transport minister John Hendy. The UK confirmed on 17 July it will introduce the Sustainable Aviation Fuel (Revenue Support Mechanism) bill to support SAF production. The government previously said it aims to introduce the mechanism, which will be industry funded, by the end of 2026 . "Together with the SAF mandate, [the mechanism] will give the investment community confidence to invest in these novel and innovative technologies", Hendy said. By Evelina Lungu Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Q&A: French state auction for biomethane RGGOs


06/11/24
06/11/24

Q&A: French state auction for biomethane RGGOs

London, 6 November (Argus) — France's first auction for state-owned biomethane renewable gas guarantees of origin (RGGOs) is due to take place on 4 December. It will be run by European Energy Exchange (EEX), which also manages the French biogas registry. Argus spoke to Aude Filippi, director of business development gas and sustainability markets at EEX, about biomethane RGGOs in France and the new auctions. Edited highlights follow: How are RGGOs currently traded in France? All RGGOs for biomethane injected into the French gas grid are currently exchanged via the over-the-counter (OTC) market, and the transfer of ownership is done via the French biogas registry. The RGGOs are tradeable for 12 months and usable for 18 months, and are issued in monthly intervals. The market has been growing quite significantly. Between January and September 2024, 8.5TWh of RGGOs were issued and 7.2TWh cancelled, while in 2023 there were 9.6TWh issued. Almost all of the issued RGGOs are cancelled, with very few expiring after 18 months. Why are the biomethane RGGO auctions being launched now? The French state owns all the RGGOs from biomethane produced from subsidised plants where the contract was signed after 9 November 2020, and now the French state wants to sell them. Even though the contracts were signed in 2020, it takes time to put biomethane into production, so very few of the RGGOs have expired so far. But the volume being produced is growing so it is important that we now have the auctions. What size volumes are you expecting to be in the new biomethane GOO auctions? We expect over 80,000MWh in the first upcoming auction, with volumes likely to increase in the following sessions. What buyers are you expecting to participate in the auctions? Essentially it will be the members of the French biogas registry that we have connected today. And some members connected to the French power GOO auctions at EEX might participate, so we expect that it will be a similar target group, but for gas. Will buyers be able to export the biomethane GOOs for use in other countries? Today we are not yet connected to a hub for the international trade of RGGOs. At the moment, we are working with the hubs to get connected. Why do the auctions have a mechanism for certain buyers to reserve volumes in the auction? The idea is that the operator of a production device will have the ability to buy the RGGOs produced from this particular device from the French state. They are then committing for one year at least to buy these RGGOs at the auction price plus a 30pc premium. By Emma Tribe Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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