UK low wind generation expected to last to Christmas: Good Energy

A sustained period of low wind generation in the UK since mid-December was expected to continue until Christmas, utility Good Energy Group said in a market update Dec. 22.

UK wind levels were just 33% of seasonal norms with the impact of the shortfall being felt across the industry via extremely high natural gas and power prices, it said.

"Colder and calmer weather conditions, coupled with higher customer volumes and elevated market prices throughout the winter will require additional working capital," it said.

The utility was in talks with financing partners to help meet short-term working capital needs, but conditions since November would impact full-year profit by GBP3 million ($4 million), it said.

"This is a national crisis. Wholesale gas and power prices have increased to unprecedented levels over the last three weeks, creating an extremely difficult operating environment for every business in the industry," Good Energy CEO Nigel Pocklington said.

"While we have a very strong track record in forecasting and hedging, these unparalleled price hikes, together with the very low levels of churn within our customer base, means that we require far greater working capital to trade similar volumes at these stratospheric price levels," Pocklington said.

The government should "support the industry at large in navigating these short-term challenges to protect bill-payers and those that serve them," he said.

Since the utility's last trading update on Nov. 25, day-ahead power and gas prices for December have been, on average, 36% and 35%, respectively, more expensive at GBP256/MWh and GBP2.71/therm than November.

Q1 2022 baseload power and gas prices at GBP489/MWh and GBP4.39/therm were 102% and 89% higher.

"The increases in nearer term power and gas prices are all now feeding very strongly in 2022/2023 seasonal contracts," Good Energy said.

S&P Global Platts assessed the price of UK day-ahead baseload power at GBP327.15/MWh on Dec. 22, up 33% since the start of the month. It assessed UK NBP spot gas at GBP4.50/th on Dec. 21, up 20% day on day.

Good Energy is a generator and supplier of 100% renewable power. It owns two wind farms, six solar farms and sources electricity from a community of 1,600 independent UK generators.