On Wedesday evening day-ahead baseload power was trading at close to “an all-time record of £160.00/MWh” – three and half times the average for the year so far – according to price reporting firm ICIS.
The energy system was hit by a double whammy, as the unusually warm weather for September pushed up demand from air conditioning units, and output was cut by planned outages, several shutdowns at coal and nuclear plants, and even the partial failure of an interconnector.
N2EX was forced to hold a second day-ahead auction on Wednesday after some contracts exceeded a £500.00/MWh threshold. The exchange recorded a price of £999.00/MWh for delivery in one hour on Thursday evening. National Grid also accepted contracts at up to £1,500/MWh as it sought to balance the system.
“On Wednesday, the UK power market saw record high prices being paid for short-term electricity contracts,” said head of power at ICIS Zoe Double. “Three £200/MWh transactions were the highest priced continuous-delivery deals – known as baseload trades – ever seen on the UK market.”
She continued: “The high UK price on Wednesday was a reaction to unusually high demand for energy caused by the unseasonable heat wave, and the temporary loss of some major power plants from the system. While some of this was expected, some of it was unexpected.
“The supply-demand crunch has given us an early taste of what could be a very volatile six months for the UK power market, as it will be the first winter since the mass closure of coal-fired plants that took place in March this year.”
The bullishness continued on Thursday as the price for baseload power on Monday hit £200/MWh – four and half times the average for 2016.