The ICIS Power Index Q1 2017 analysis shows UK energy values reversing their upward trend
London, UK, 11th April 2017 – UK wholesale energy prices averaged their highest level in two years in Q1 2017, although long-term contract values began to slide from February.
Energy prices were boosted over 2016 by concerns over supply availability, as older loss-making electricity generation has switched off, and technical issues with gas storage meant that the UK imported record levels of gas.
This alarm pushed the ICIS Power Index (IPI) average over Q1 2017 up 32% year on year to £46.192 per megawatthour (MWh) – the highest quarterly average since Q4 2014.
Gas for delivery over the next year was even more pronounced, up 42% to average 46.071 pence per therm (p/th), the highest since Q2 2015.
However, both gas and power supply continued uninterrupted throughout the winter, so long-term energy prices dropped.
‘Additional supply from Norway and imports of gas from Europe via the Interconnector helped to ensure that Britain managed its demand, despite lower levels of liquefied natural gas,’ said Ben Wetherall, Head of Gas at ICIS. ‘Technical issues with long-range storage remain, but the system has shown its flexibility.’
‘Market participants have been reassured by the electricity system coping during the winter, despite tight supply margins,’ said Zoe Double, Head of Power at ICIS. ‘There are still concerns as to whether payments to generators under a new capacity market will incentivise plants remaining online next winter, but more renewable energy is likely to be available as well.’
The ICIS Power Index delivers independent insight into the complex world of wholesale power prices for both households and industrial electricity consumers, based on real market trading.
The ICIS Power Index is updated every working day and is freely available from the ICIS website, along with ICIS’ quarterly analysis of price trends and volumes.
ICIS is an independent price reporting agency focusing on global energy, petrochemical and fertilizer markets, and we have covered the complex UK electricity market for nearly two decades. Every day, we assess electricity contracts for more than 40 different delivery periods in the UK market alone. The analysis and data that we produce is widely used as a reference price in energy contracts.
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Tara Sabanandan, Marketing Manager, ICIS
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