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Energy Prices (mid March 2014)

Electricity:   The Carbon Price Floor is set to double at the start of April to £9.55/TCO2, while 2400 MW of generating capacity is set to close, in addition to planned maintenance shutdowns for many stations over the summer.

Continuing warm temperatures are reducing demand for electricity. As the weather trend is projected to continue in to the spring the reduced demand should put pressure on prices. Forecasts for unsettled weather in northern UK are predicted to boost wind power output by 20% over normal levels.

Gas: Concerns are still persisting over the future of Russian gas imports to Europe if relations sour over the Ukrainian situation, though analysts suggest it’s unlikely given the economic importance to Russia of European revenues.

The general outlook for UK gas markets in summer 2014 remains brearish, the mild start to the year has kept prices low over the winter and gas reserves remain higher than anticipated. Additional output from the North Sea due to new fields opening means that the UK gas production will be 0.5 BCM higher than last year.

Summary position:

Oil $108.47/barrel

Coal $81.30/MT

EUA 14 €6.53/TCO2

Gas 63.10/th Apr 14

Gas 63.73/th Oct 14

Electricity £50.39/MWh Apr 14

Electricity £52.93/MWh Oct 14