Record wind generation from storms Ciara and Dennis

Tuesday 18th February 2020

The storms of the last fortnight have brought record energy output with the highest levels of UK wind generation recorded. This has seen short-term gas and power costs at very low levels.

At the same time, the bearishness in Annuals seems to have bottomed out with sharp reversals over the last few days. There is the sense that the discount built in in relation to the coronavirus outbreak is too deep, and that global disruption might not be as significant as first envisaged. Whilst general production has slowed in China, there may be a government stimulus package once the virus is under control (so energy demand will rise). Another knock-on effect of coronavirus is reduced solar panel production – China produces 95% of the world’s panels, so this is at a virtual standstill, so there are potential cost implications down the line. Prices have also been influenced by oil coming off 12m lows, with the expectation that OPEC+ might implement another price-boosting production cut; whether Russia agrees to this might determine prices in the next few weeks.