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UK power prices have continued to climb higher in recent weeks as concerns over the ongoing Nuclear outages and safety probe in France have grown. The concerns are focused on particular parts that are subjecting to high carbon concentrations within the steam generators of the units. This can have impacts on the steel in the plant and pose safety risks.
This article aims to highlight the recent changes in the oil market, particularly focusing on OPEC’s recent attempts to cap production and the resilience of the US shale industry in the face of low prices. It then briefly looks at the wider supply and demand outlook before arguing that a return to $100/bl oil is unlikely any time soon.
The UK’s only long-range gas storage facility Rough will be offline this winter raising concerns over the security of gas supplies during the period. Ongoing issues at the facility have left many questioning the UK’s lack of gas storage capacity compared with other large European gas markets.
Through the fog of post-Brexit political changes and daily exchange rate developments impacting the energy markets it is important to look further ahead to critical issues for the UK energy landscape. One key question is how security of supply is likely to be ensured in the face of nuclear fleet closures over the next two decades and unabated coal phase out by 2025.
November 2015 saw National Grid issue its first notification of insufficient system margin (NISM) since 2012. Just six months later – on Monday 9 May 2016 – National Grid issued another NISM – once again the so-called system margin was expected to fall below acceptable levels. This was the first NISM issued during a summer since 2008.
Two recent policy announcements have bolstered the case for interconnectors – conferring differing advantages to the UK and the countries at the other end of the interconnector.
The Chancellor George Osbourne announced several changes to UK energy taxes when delivering his eighth Budget on 16 March. He also pointed towards new funding for up to 4GW of renewable capacity during this Parliament.
As the UK switches from coal to gas, the gap between power supply and demand will tighten further. New plant is needed but growing policy risk is deterring investment.
DECC released a much anticipated consultation proposing reforms to the Capacity Market yesterday. The consultation will run until 1 April and proposed the following changes:
Holding a new additional auction for 2017-18 payments; Buying more capacity and buying it earlier; Tightening delivery incentives
SSE announced on 4 February that it will close three of the four generating units at its Fiddler’s Ferry coal power station in April. Shortly afterwards on 8 February, Engie announced the closure of its Rugeley coal plant. The announced closures will strip another 2.5GW from available capacity ahead of next winter.