UK oil-fired power generation hits two-year high amid record demand
London (Platts)--12Dec2012/1229 pm EST/1729 GMT
The UK has resorted to record levels of oil-fired power generation,
forcing within-day power trade to levels in excess of GBP250/MWh Wednesday,
as demand surges to its highest levels since February, according to Platts
Oil-fired power ramped up over the afternoon to reach 1.2 GW, or 2.3% of
the total generation mix at 1500 GMT, the first time it has moved beyond the
1 GW mark since December 2010, Platts Powervision data shows.
The move to more expensive oil-fired power is believed to have a direct
impact on the UK's within-day electricity market, as power for delivery
Wednesday evening between 1700 GMT and 1900 GMT was last heard trading at
GBP258/MWh, a trader said.
On Tuesday, Platts closed peakload power for day-ahead delivery at
"That's the impact that Littlebrook [oil-fired power plant] is having on
within-day prices at the moment," a UK power trader told Platts.
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"[The National Grid] was warming Littlebrook last night for earliest
synch sometime this afternoon," the trader said.
"It's purely a capacity thing," he added, explaining that many of the
UK's gas-fired power plants are kept on short-term reserve contracts with the
Fossil-fuel power generation surged Wednesday as severe cold weather
conditions across the UK's more densely populated southeast England region
caused demand for gas and power to surge to levels not seen since February,
while low wind generation, an unplanned nuclear outage and increased exports
to Continental Europe constrain supply.
GAS-FIRED POWER TESTS 2012 RECORD
As a result of the cold, gas-fired power generation in the UK tested
record highs Tuesday evening and may surge further over Wednesday's peak
power demand hours as favorable clean spark spreads and subdued low carbon
generation bolsters its share of the generation mix, Platts data shows.
Tuesday evening saw gas-fired generation touch highs of 20.731 GW amid
peak demand levels of 56.65 GW, narrowly missing this year's highest
gas-generation contributions so far at 22.351 GW seen February 3, according
to data from Platts Powervision.
Wednesday evening peak daily power demand is expected to push 1.4 GW
higher than Tuesday's levels to reach highs of 58 GW, which when combined
with more favorable market conditions could see February's record levels
tested, traders said.
At 1600 GMT, gas-fired generation reached 20.5 GW or 36.9% of the
generation mix, while coal-fired power stood just slightly higher at 23.2 GW.
Just a week previously, coal had dominated the generation mix at 22.4 GW
while gas-fired power contributed just 13.5 GW.
"I believe day-ahead peak demand [for Wednesday evening] is forecast to
be the highest since February, so the gas plants are needed on system," the
power trader said.
"Gas plants are generally always needed on the system -- it's just the
lower efficiency ones are needed at the moment too," he said.
CLEAN SPARK SPREADS SOAR
Prior to December's surge in electricity demand, gas-fired power
generation fell to its lowest levels recorded due to unfavorable market
conditions, weighing on the potential profits from gas generation.
However, as day-ahead baseload power prices lifted over 10% and the UK's
NBP gas market turned bearish amid an oversupply of gas, clean spark spread
prices rocketed to just over three times the year-to-date average, Platts
data shows, supporting greater gas-burn.
Platts measures the profitability of gas-fired generation against the
cost of emissions allowances and fuel costs through its day-ahead clean spark
spread which surged to GBP6.5689/MWh by Tuesday's close for power plants at
Tuesday's close stands in stark contrast to the November average price
for the day-ahead clean spark spread at just GBP1.88/MWh, up slightly from
October's GBP1.31/MWh average.
In September this year, gas-fired generation hit 14-year lows as
day-ahead clean spark spreads plunged into negative territory at an average
price of GBP-0.29/MWh amid a perfect storm of strong wind generation and low
The average year-to-date clean spark spread is GBP2.137/MWh, according
to Platts data.
--Jillian Ambrose, email@example.com
--Edited by James Leech, firstname.lastname@example.org