As wholesale power prices continue to soar to new record levels, one academic has predicted even large suppliers will be under extreme pressure.
Average prices in the day-ahead market for tomorrow (14 September) hit £461/MWh on the EPEX market and £380/MWh on Nordpool. Previous record prices set at the end of last week hit £285/MWh.
Prices at the peak of the auctions were £1,675/MWh for EPEX and £1,750/MWh for Nordpool, according to analysis from EnAppSys.
Speaking to Utility Week at the end of last week, Jeff Hardy, a senior research fellow at the Grantham Institute for Climate Change and the Environment at Imperial College London, expressed concern about some of the larger disruptor brands that do not yet have a generation arm, or at least do not have a large generation business yet.
He said: “At the moment because the prices are just staggeringly high, if you don’t own your own assets, and therefore you are really at the mercy of the spot markets, then it must be horrible.
“The prices are high and you have got a price cap in operation for a lot of your customers. Two companies went bust recently and there’s going to be quite a few more I suspect because, if you haven’t got anything that de-risks your exposure to wholesale prices as a supplier, then I think you are going to be in deep trouble.
“That might not just be the little ones, they’re obviously the most exposed, but even some of the bigger ones must be really hurting right now. I am sure they have probably got enough financial backing to get through but some of the wholesale costs earlier this week were £800/MWh give or take.”
Last week Andrew Stone, managing director at Interpath Advisory, said rising pressures in the energy retail market such as the soaring wholesale costs mean liquidity has become a “primary concern” for many businesses in the sector.
Additionally, an analyst for price reporting firm ICIS told Utility Week that the surge in gas prices seen over recent weeks and months is like nothing the company has ever witnessed in nearly three decades covering the market.