S&P Global Platts: UK gas-for-power demand hits six year high
Monday, Feb 06, 2017
UK gas-fired power generation hit a six-year high in January as day-ahead gas and power prices both climbed strongly, according to S&P Global Platts data.

Gas-for-power demand stood at 2.21 billion cubic meters (Bcm) in January, recording increases of 6% month-on-month and 30% year-on-year.

Cumulative gas-for-power demand for Winter 2016-17 to date stood at 8.43 Bcm, an increase of 56% on an annual basis and already 16% higher than total gas-for-power demand during the whole of Winter 2014-15.

"Improved economics for UK gas plant have coincided with coal plant closures, accelerated by the UK Government's Carbon Price Floor," said Henry Edwardes-Evans, managing editor of Power in Europe, an S&P Global Platts publication.

"This tax on CO2 emissions has hammered coal plant economics, to the point where Capacity Market subsidies are required to keep them open and bolster security of supply," Edwardes-Evans said.

Gas plant profits are under pressure again, however, with UK gas pricing supported by colder-than-average temperatures, a weak LNG delivery schedule, and more expensive Continental European hub pricing.

The month-ahead clean spark spread -- the theoretical margin available for a 50%-efficient gas plant including emissions -- was assessed at £7.7/MWh for the final day of January after beginning 2017 at £12.2/MWh, having averaged £29/MWh during November last year.

Meanwhile the quarter-ahead clean spark spread has hovered around £6-£7/MWh this year, suggesting that the recent peak in gas-fired profitability is not expected to run into the summer.

About S&P Global Platts

At S&P Global Platts, we provide the insights; you make better informed trading and business decisions with confidence. We're the leading independent provider of information and benchmark prices for the commodities and energy markets. Customers in over 150 countries look to our expertise in news, pricing and analytics to deliver greater transparency and efficiency to markets. S&P Global Platts coverage includes oil and gas, power, petrochemicals, metals, agriculture and shipping.

S&P Global Platts is a division of S&P Global (NYSE: SPGI), which provides essential intelligence for companies, governments and individuals to make decisions with confidence.

For more information, please visit: http://www.platts.com
Find out more about North American Oil and Gas from NewsBase