The Energy Markets in July returned to a disappointing narrative
Average power prices reverted back to their bull run following June’s dip. In July 2021, they averaged €151.30 per mWh, up almost 5 times on the same period in 2020 and 54% increase on the previous month. Prices are unseasonably high versus similar periods since ISEM commenced in Oct 2018.
Specifically, the outturn in July arose for the following reasons:
- Wind generation contributed only 11% of the generation mix, down 55% on June, and historically low.
- Unscheduled Outages remain at some key key Combined Cycle Gas Turbine (CCGT) generation plants (e.g. Whitegate 440MW,Huntstown 400MW). Overall average outages for July increased on 13% on June at 2.75GW.
- Day ahead Gas prices averaged 90p/th up 25% on June averages and 600% on the prior year. Prices breached £1/th at month end.
Gas, Coal & Carbon
Day ahead Gas prices up 25% on June levels due to;
- Outages in Europe meant storage was not being replenished at a sufficient pace.
- LNG deliveries to Europe was weak due to strong demand and better prices available in Asia.
- Summer storage injection is further behind schedule, therefore increasing demand for gas in Q3, causing further lifts in gas prices.
- Gas stores are 53% full v over 80% in July 2020.
Carbon prices traded sideways around the €55/tonne level in July.
Coal prices increased further as increasing gas prices has brought coal based generation higher in the merit order for power.
12 months forward prices continue to increase each month in 2021 and here is why;
- On going support for gas prices as gas storage levels in Europe are at multi-year lows.
- High gas demand in Asia
- Significantly, continued outages in key Irish power stations are expected to continue throughout 2021.
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