Energy Bulletin
Issue 19

We find ourselves in extraordinary times, but we’re bringing you our round up of news from the Energy sector as normal. We’ve seen Covid-19 have an impact on energy usage, which has had a knock-on effect on pricing, but many other aspects remain reasonably unaffected.

The Carter Jonas Energy team continues to work as normal despite the temporary closure of all Carter Jonas offices and, if you would like to discuss any of the issues mentioned in this month’s bulletin, please do not hesitate to get in touch – we can all be contacted on our normal numbers.

UK POWER PRICES DROP TO NEW LOWS AS SUPPLY OUTSTRIPS PLUNGING DEMAND

The current UK/European lockdown due to the Covid-19 pandemic has resulted in a drastic drop in energy demand which is only forecast to drop further in the next few weeks as temperatures look set to rise and output from renewable generators increases. As a result, UK power prices have been pushed lower, with Annual-ahead, Month-ahead and Day-ahead all at, or close to being at, 13-year lows. Comparatively, demand for gas has been less affected due to the dominance of the domestic heating market. We are therefore recommending that clients with gas and electricity contracts renewing in 2020 to look at these now to take advantage of the current lows .

PPA MARKET STRUGGLES TO GAIN ANY UPWARD MOMENTUM

As import power prices tumble, the export market for generators via a Power Purchase Agreement (PPA) has also been on free fall over the last couple of months. As a result, Carter Jonas has moved most generators renewing in April and May 2020 on to the FiT export tariff which is currently at 5.5p/kWh. Other clients have moved on to short-term fixed PPAs in order to manage the uncertainty in the market, which is anticipated to remain over the coming weeks, potentially months.

UK GREENHOUSE GAS EMISSIONS FALL FOR SEVENTH YEAR IN A ROW

In 2019, the UK’s greenhouse gas emissions fell for the seventh year in a row as renewables again increased their share of generation. Provisional data from the Government showed that emissions were down 3.6% from 2017 and more than 27% from 2010. Renewables will continue to play an important role in the future in order to meet the government’s energy strategy. If you have land which you would like one of the team to review for renewable energy opportunities, please get in touch.

IS ONSHORE WIND ON THE CUSP OF A RESURGENCE?

Following several years’ hiatus due to policy prevention, it seems as though there will shortly be a resurgence in Onshore Wind in the UK, after a Bill was ordered to be printed and presented to the House of Lords on the 30th January 2020. The Bill, dubbed the “Contract for Difference and Onshore Wind Bill,” was put forward to the Secretary of State and intends to hold a Contract for Difference (CfD) auction a minimum of every two years until the UK hits its Net Zero targets, with the auctions proposed to include both onshore wind and solar PV.

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THE UK ENERGY MARKET

Short-term prices have been hit by the current UK/Europe lockdown, resulting in a plunge in demand and market uncertainty.

Short-term prices have been hit by the current UK/Europe lockdown, resulting in a plunge in demand and market uncertainty. Day-ahead prices traded as low as £23/MWh amid forecasts for windy and warm weather and significant drops in demand – March demand dropped around 11% below March 2019 levels. April 2020 prices crumbled 27% during the second half of March to £24/MWh – the lowest Month-ahead price, by some margin, since July 2007. Gas prices followed suit as demand and projected demand was slashed as businesses went into lockdown.

Further out, prices saw progressively smaller losses and felt limited support towards the end of the month following a surge in oil prices.

Further out, prices saw progressively smaller losses and felt limited support towards the end of the month following a surge in oil prices. October 2020 Annual shed 9%, while April 2021 Annual shed 7% before a more than 20% surge in oil markets resulted in a slight uptick in prices. The oil market was reacting to comments by President Trump that he is expecting OPEC+ to soon agree a 10 million barrel/day production cut. The impact on markets was short lived, however, as the bearish mood dominated once more and pushed prices lower, helped further by a crash in carbon prices which fell by 30% in the second half of March.

The outlook is one of uncertainty; any extension of current lockdowns across Europe are likely to pressure both short-term and long-term prices down further, driven by further drops in energy demand as we enter the warmer seasons. High renewable output, coupled with low demand, has already seen prices drop further at the start of April. Last weekend, renewable output from solar and wind generators made up almost 65% of the UK’s overall electricity mix.

Anyone interested in advice on how the current situation will impact their energy contract and/or PPA should please get in touch with Helen Melling, Energy Specialist at Carter Jonas.

Seasonal Power Prices

In other news

Carter Jonas is currently negotiating terms for in excess of 20 large scale subsidy free ground mounted solar PV developments on behalf of landowners.

Carter Jonas is currently negotiating terms for in excess of 20 large scale subsidy free ground mounted solar PV developments on behalf of landowners. In March the first of the schemes, a 50MW solar and battery energy storage development proposed in East Riding of Yorkshire, was successfully awarded planning permission. A 60MW scheme, currently the largest proposed scheme in Wales, also went out to public consultation, with an application expected to be submitted in Summer 2020.

SSE has exited the coal generation market in a landmark moment, as coal-fired Fiddler’s Ferry closes on Tuesday 31st March.

SSE has exited the coal generation market in a landmark moment, as coal-fired Fiddler’s Ferry closes on Tuesday 31st March. The closure forms part of SSE’s commitment to net zero and comes five years ahead of the government target to end unabated coal-fired electricity generation by 2025.

The UK government has agreed legislation to extend the deadlines by which Feed-in Tariffs (FiT) applications for accreditation can be made for certain eligible installations.

The UK government has agreed legislation to extend the deadlines by which Feed-in Tariffs (FiT) applications for accreditation can be made for certain eligible installations. This is due to delays caused by Covid-19. The 6-month extension means that energy installations that pre-registered between 1st March 2019 and 31st March 2019 are given until 30th September 2020 to commission and apply for accreditation.

The Winter 2019/20 Triad dates have been revealed by National Grid ESO, with all three falling in 2019.

The Winter 2019/20 Triad dates have been revealed by National Grid ESO, with all three falling in 2019. The three highest peaks in demand were on Monday 18 November, 17:00-17:30; Monday 2 December, 17:00-17:30 and Tuesday 17 December, 16:30-17:00. If any clients would like Triad payments checking, please get in touch.