ICIS, the global independent price reporting agency, has highlighted wholesale market concerns over the threat of UK gas and power supply shortages in Winter 2014 / 2015 in the release of its third quarter (Q3) analysis of 2014 into the ICIS Power Index (IPI).
The IPI, which reflects wholesale power prices over a year of delivery, confirms a downward trend, but also reveals a recent peak due to concerns over a potential shortage of supply.
These data and sources show this is a result of more British nuclear generation capacity being offline for the winter than expected.
The news that these unscheduled major repair and maintenance works could last into December 2014 caused the IPI to rise by 2.5% day on day after the nuclear generator EDF announcement was issued on 4 September – one of the largest single increases this year.
Two EDF nuclear reactors – totalling 1.2GW output – were taken off-line unexpectedly in August, which accounts for some 10% of the UK’s supply surplus during some weeks in the winter.
Originally, the units were expected back by the end of October, before the colder weather and high electricity demand, but operator EDF Energy announced on 4 September that the plants were expected to return between November and December.
In total, the UK is going into the winter with 2.9GW of nuclear capacity offline – last year, only two units totalling 1.1GW were off line in December.
EDF is the state-owned French utility which owns and operates eight atomic power stations in the UK – including the Scottish nuclear plants at Torness and Hunterston.
At the same time, ongoing geo-political tension between Russia and Ukraine has caused concern over security of gas supplies. While Russia does not directly export gas to the UK, any disruptions to its supplies to continental Europe have a powerful knock-on effect on the UK market.
Zoe Double, Head of Power at ICIS – an independent price reporting agency focusing on global energy and petrochemical markets – commented: “Energy companies are actively buying and selling electricity in the market right now for delivery over the next year. Any price rises on the wholesale market could affect what consumers pay later on.”
The IPI delivers insight into the complex world of wholesale power prices for both households and industrial electricity consumers. In its first comprehensive quarterly analysis following the launch in August 2014, the index has shown that the conflict in Ukraine exacerbated fears over reduced UK power generation.
The ICIS Power Index is updated every working day and is freely available from the ICIS website, along with ICIS’ analysis of price trends and volumes during Q3 2014.
Angela Knight, Chief Executive of Energy UK, commented: “Energy UK, and its members, has been very keen to see accurate, high-quality information readily and easily available so that everyone – not just energy insiders – can see what is going on in the electricity market. The ICIS Power Index is a great step forward in helping dispel myths about energy prices.”