Day-ahead power surges on low wind generation

Wednesday 3rd March 2021

Whilst power markets were generally benign and bearish through the second half of February, they was a sharp upturn in short-term wholesale as we entered March. A now familiar scenario of low wind and cooler weather sent Day-ahead above £100/MWh again, with it having been at £44 a few days earlier. The uptick was also driven by power station outages both here and in France.

The rise in Short-term offered some support to Annuals. Generally however the mood is far more bearish across both power and gas as the winter risk premium falls and we enter meteorological spring. The fall in Asian LNG prices means there are sustained delivery levels to Europe. Whilst the Texas cold snap saw record draws on US gas storage, the general output picture remains strong. The announcement of the UK carbon trading scheme starting in May has seen a reduction in EU allowance buying activity. However, the bearish mood is tempered somewhat by European gas storage levels. These are significantly below where they were this time last year, so this indicates increased replenishment in the coming summer and thus upward price pressure.