S&P Global Platts: Export Cut, Heatwave sees UK Gas Price Fall in June
Month of Two Halves for Power as Renewables Boom then Bust
LONDON, July 6, 2017 /PRNewswire/ -- UK day-ahead natural gas wholesale prices fell heavily in June, dragged lower by IUK gas interconnector maintenance and reduced demand, but were bouncing back strongly early July, S&P Global Platts data showed.
For electricity June was a month of two halves, with UK day-ahead prices initially deflated by periods of exceptional solar and wind generation, only for the prompt to hit a six-month high June 23 on steeply reduced renewables and short-term calls on conventional generation.
Annual maintenance from June 14-28 on the IUK gas line saw daily flows to the Continent drop significantly, while end-user gas demand at home was down 11% to 3.68 Bcm in June.
Gas-for-power demand experienced the sharpest loss, down 18% year-on-year to its lowest level for a calendar month since December 2015. Local distribution gas demand was down 8%, driven lower by a week of very high temperatures from mid-June.
Injections into storage were predictably lower year-on-year due to the Rough outage, with operator Centrica announcing June 20 its intention to close the facility permanently.
Meanwhile UK gas production continues to post annual increases, climbing 14% in June to 3.07 Bcm, while imports from Norway fell 23% to 1.44 Bcm and LNG regasification was down 26% to 346 million cu m.
With export demand recovering into July, UK gas prices had risen above 38 p/th by July 4, S&P Global Platts data showed. The rebound is likely to be short-lived, however, with several potential LNG cargoes on the horizon and Norwegian flows poised to increase, according to analysts' forecasts from S&P Global Platts.
UK power prices slumped in the first half of June in response to lower gas prices and record solar/wind production, which for one half hour period on June 7 met a full 50% of UK demand.
Day-ahead power fell to a nine-month low of £30.75/MWh June 15 as solar alone peaked above 7 GW, meeting around 20% of national demand. A week later, and the prompt had risen to a six-month high of £66/MWh on calm, cloudy conditions and increased gas-burn, underlining the value of flexible standby generation.
| Platts UK Day-Ahead Power and Gas Assessments |
||||||||||
| Jun-17 |
May-17 |
MoM change |
Jun-16 |
YoY change |
||||||
| UK power (£/MWh) |
||||||||||
| Day-ahead average |
38.47 |
40.59 |
-5% |
36.84 |
+4 |
|||||
| UK gas (pence/therm) |
||||||||||
| Day-ahead average |
34.83 |
39.24 |
-11% |
34.19 |
+2 |
|||||
| Source: S&P Global Platts |
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For more information on electric power or the methodology used by Platts in its power assessments, visit the S&P Global Platts website www.platts.com.
About S&P Global Platts
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