UK Peak Electricity Prices Reach 17-Month High

LONDON, July 12, 2010 /PRNewswire/ -- The wholesale electricity price for power delivered during peak demand periods on Monday 12 July reached a 17-month high on Friday, as high temperature forecasts boosted demand in the UK and in neighbouring markets.

Power delivered between 07.00h and 19.00h on Monday was last traded on Friday at GBP56.25/megawatt hour (MWh), its highest closing price since 12 February 2009, according to ICIS Heren historical data.

Prices have been boosted by extra demand in the UK and France after a long period of high temperatures, with hot weather encouraging more use of electricity to power air conditioning and fans.

Another key factor was increased demand from France through the 2-gigawatt (GW) UK-France interconnector, as high temperatures have led to cooling water problems and restricted power plant output. Most of France's electricity is generated from nuclear power, and these plants become less efficient at high temperatures, as the water used to cool the reactors becomes warmer than normal.

As a result, wholesale power prices in France have also risen. The French price for power delivered during peak demand periods (between 08.00h and 20.00h in France) reached EUR69.00/MWh, the highest since 11 March 2010.

"We have seen higher prices historically in both the UK and France, but the long period of warm weather has encouraged traders to make sure that they had enough power to cover any demand into this week, which has boosted prices," said Zoe Double, editor of European Daily Electricity Markets.

"It's unusual to see price levels spike to year-long highs in the summer - normally the additional demand for heating and lighting in winter mean those prices are the highest."

UK electricity suppliers buy their power at wholesale prices, so short-lived price spikes will not affect consumer prices directly. However, if wholesale prices stay high with stronger demand, this increase could feed through to retail prices when suppliers next adjust their tariffs.

Note to editors:

The UK-France interconnector allows up to 2GW to flow in either direction throughout the day.

Interconnection between different electricity markets is an important part of EU policy, as it means that markets with less demand can supply power to other markets. The ability to import and export electricity is therefore key to security of supply, both for the UK and other markets. Without interconnectors, each country would have to ensure that there was enough installed capacity built to cover the worst-case scenario

The UK has another 450MW Moyle link between Scotland and Northern Ireland, and will connect to the Netherlands through the 1GW BritNed interconnector, due to become operational next year.

France has 113GW of total installed capacity - 56% of this is nuclear, at 63GW. However, some of this capacity is only run during periods of high consumption, so-called Peakload generation. As a result, nuclear accounts for a much larger proportion of the actual electricity generated on any given day.

Throughout July (to 11 July), 79% of French electricity generation has been from nuclear power, according to data from French grid operator RTE.

For the month so far, the UK Peakload (07.00-19.00) price for power delivered during working days in July has averaged GBP52.61/MWh.

Last year, the Peakload price for working days during July averaged GBP43.93/MWh, although the maximum price during this period was GBP55.00/MWh on one day.

In France for the month so far, the Peakload (08.00-20.00) price for power delivered during working days in July has averaged EUR62.031/MWh.

Last year, the Peakload price for working days during July averaged EUR46.455/MWh, although the maximum price during this period was EUR59.25/MWh on one day.

Data from Elexon, which manages power trading arrangements in the UK, shows that France has exported an average of 370MW to the UK during UK peakload hours during July so far. On Friday, the average flow was 49MW from France to the UK but UK exports to France peaked at 926MW during one 30-minute period on Friday.

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    Contact details, for more information and interviews:

    Zoe Double
    Editor, European Daily Electricity Markets

    ICIS HEREN
    Tel: +44(0)20-7911-1875
    E-mail: [email protected]

SOURCE ICIS Heren