Short-term electricity prices rallied in November, largely supported by colder temperatures and changeable wind output. Prices hit a 7-month high mid-month at around £51/MWh, having dropped as low as £33.5MWh at the end of October. Wind has played a key role, with the spikes in prices being seen when wind levels dropped sharply, which led to coal-fired plants being switched on and a sharp increase in electricity imports to support the UK grid. Strong renewable generation towards the end of the month helped stabilise prices along with a well-supplied gas market.
Forward electricity prices, however, continued the same downward trend seen in October, largely driven by a strong supply outlook from LNG. Prices did witness a brief rally at the start of the month, driven by rises in gas and oil markets. However, by the middle of the month prices had shred almost 5% to below £48/MWh, a 19-month low. The main drivers being, high gas storage levels, expected LNG supplies and forecasts of a milder than normal winter.
Exceptionally high wind generation on the 9th December resulted in 14 hours of negative prices, the lowest level being -£88/MWh. With wind output forecast to remain high this month, and temperatures forecast to turn milder, UK electricity prices are likely to be relatively stable.