Weekly Market Update - Colder forecasts and reduced wind raise power prices

Head of Sales Trading, Fanos Shiamishis, reports on the energy market activity, covering the period 14th – 21st February 2023. On our end-of-day pricing tool, the Source, we published an in-week high of £143.20/MWh for the Summer-23 seasonal power price on 15th February, reducing to £128.62/MWh yesterday. In this blog, Fanos shares the market news and updates from the last week.

Last Tuesday, temperatures were expected to hit their lowest, but a longer-term weather outlook indicated a colder than seasonal-average March, adding price support for the month ahead contracts across gas and power.

The T-1 UK power capacity auction for 2023/24 cleared at £60/kW per year in round 4, with 94.42% of the entered capacity (6124.249MW) awarded in agreement. On Wednesday, the cooler forecasts continued to compound the temperature outlook, with all contracts registering significant gains. 

As the week continued, a milder temperature outlook for the week ahead and strong LNG supplies eased European gas prices. UK power also came off across the curve, with liquidity mainly in the front month and front quarter, but losses were limited by a strong carbon rally. Nordpool day ahead auction’s overnight product cleared below £100/MWh amid strong wind generation forecasted.

Yesterday, the overall market increased for the week ahead and into the summer, with a combination of colder forecasts and reduced wind for the remainder of February. Following no registered trades at the end of last week, March-23 opened very strong in the morning, but a late sell-off registered a notional fall in the front month contract against the previous traded event on 16th February.