National Grid PLC recently issued its 2015-2016 Winter Outlook for the UK, detailing how electricity and natural gas supply is positioned to face winter demand. This report and others indicate UK energy prices should largely remain stable through winter of 2015/2016.
- While the UK’s generation capacity margin has declined year-over-year, National Grid reports its de-rated capacity margin of 5.1 percent is “manageable”.
- Low forward power prices in Continental Europe are encouraging imports into the UK via interconnections. The price spread between the UK and Continental Europe is expected to continue and will help pad generation capacity.
- Despite reduced domestic storage space, natural gas supplies should keep up with winter heating and generation demand due to several favorable factors. An oversupplied European natural gas market, an unconstrained Norwegian pipeline network, and growing global LNG supplies are expected to keep gas prices low and supply abundant.
- Earlier in the year, the current strong El Niño was expected to bring a harsh, cold winter to the UK. Current weather analysisis now indicating this is less likely to be the case.
UK natural gas and electricity supply is expected to be largely stable this winter in most circumstances. Coincidence of extreme winter weather conditions, a gas supply disruption in Ukraine, interruption of Norwegian gas flows, or any factor that would encourage generators to export power to mainland Europe would introduce additional volatility into the UK marketplace. However, growing global supplies of LNG are expected to act as a buffer to high volatility caused by any of these potential events.
The information in this page is offered only for general informational and educational purposes. It is not offered as and does not constitute legal advice.