Strong gains on the UK NBP gas market coupled with forecasts for wind power generation to more than halve sent UK prompt power prices up 22% Tuesday, traders said.
On the OTC market, the baseload day-ahead power contract was last heard trading at GBP52.25/MWh before Platts 1100 London time close, adding GBP9.45 in value on the day, while peak power for Wednesday delivery jumped to GBP62/MWh, GBP11 above the price for Tuesday power.
"Margins are quite tight...Wind is falling and gas has picked up," which pushed the UK prompt prices higher despite weak demand and warmer-than-expected temperatures, one trader said.
According to National Grid data, wind power generation is expected to decline to 2.2 GW Wednesday, declining from peak wind forecast of 5 GW Tuesday, which would likely tighten surplus margins.
Also, rising gas prices gave a bullish signal to the power market Tuesday with the NBP within-day and day-ahead both up more than a penny from the previous close at 52 pence/therm and 51.90 p/th respectively.
On the supply side, nuclear power generation, which stood stable at 4.9 GW at midday Tuesday, has fallen by nearly 3 GW following unplanned outages at EDF's Hartlepool and Heysham nuclear reactors in August.
Furthermore, gas and coal plants contributed nearly the same amount of power at midday Tuesday, the National Grid data showed. Gas-fired power generation fell to 11.8 GW, accounting for 31.5% of the UK's total electricity supply Tuesday, down from 13 GW midday Monday.
Coal-fired power stations, on the other hand, rose to 11.5 GW, or 30.5%, at midday Tuesday, up from 10.3 GW recorded at the same time Monday, the grid data showed.
Renewable sources of power such as wind and hydro accounted for 10.3% and 1.9% of the UK's fuel supply, producing 3.9 GW and 733 MW of electricity at midday Tuesday.
