Energy Market Risk Analysis | Late August 2014

Nuclear shutdowns lend support

The shutdown of two UK nuclear power stations for safety checks this week has helped boost short-term power and gas prices, while rising tension between Russia and Ukraine has pushed mid to longer term prices back up to the levels seen in the late-July spike (at the time of publication they were pushing yet higher on reports of a skirmish between Russian and Ukranian forces inside the Ukrainian border).
EDF, following the confirmation of a crack in a boiler unit at a nuclear reactor at the Heysham 1 power plant, has taken the other reactor at the site and both reactors at the Hartlepool station (which are of a similar design) offline for inspection. As the reactors went off the grid Day-ahead power rose from £35/MWh to up to £41/MWh, a three-month high, helped by a drop in wind power output.

 

Winter rebounds by 7%

Ukraine’s approval of a law allowing the imposition of sanctions on Russia – including possible limitations on gas transit through the country (half of all Russian gas exports to the EU pass through Ukraine) – has helped ratchet up gas prices over the last few days, against a background of increasing tension between the two countries as an aid convoy from Moscow arrived at the border. Short-term prices have also been boosted by a drop in UK temperatures and increased gas demand from the power sector as two nuclear plants were shut for safety checks and wind power output dropped.

 

The previous market risk analysis for Early August


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Energy price shift between 05 August 2014 and 14 August 2014

Elec: +3.1%

Gas: +4.15%

Coal: +1.32%

Oil: -0.54%
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