London — UK day-ahead power prices slumped on Tuesday as weakening power demand due to the onset of milder-than-normal temperatures coupled with expectations for higher wind output weighed on the prompt, traders said.
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At the 11am London time market close, both the baseload and peakload power for Wednesday deliveries erased GBP1.90 in value each to close at GBP39.85/MWh and GBP41.85/MWh respectively.
No peak (block 3+4+5) contracts were seen trading on Tuesday and was assessed using block 3+4 power price of GBP42.75/MWh and block 5 power price of GBP40.05/MWh.
The UK day-ahead auction outturned largely in line but slightly lower than the OTC market price at GBP39.44/MWh on the base and GBP41.53/MWh on the peak, according to N2EX and APX exchanges on Tuesday.
According to National Grid, peak power demand is expected to slip to 39.3 GW on Wednesday, down from Tuesday's forecast demand of 40.1 GW. Actual peak power demand on Monday missed estimates marginally and outturned at 40.5 GW, the grid said.
Forecaster CustomWeather said it expects temperatures in many parts of the UK to increase 1-4 degrees Celsius above seasonal average in the next two days, while temperatures in Birmingham is set rise 7C above norms on Thursday.
On the supply side, wind power production is expected to reach a peak of 5.7 GW on Wednesday, climbing higher from 3.8 GW predicted for Tuesday, the grid said.
At midday Tuesday, wind output still remained below 1 GW at 712 MW, accounting for less than 2% of the UK's fuel mix, the grid data showed.
Reduced wind supply pushed up production in gas-fired power plants, which contributed 21.8 GW of electricity to the grid, accounting for nearly 59% of the UK's supplies.
Electricity from coal plants continued to decline, generating only 1.1 GW (3%) of power midday, while power from nuclear stations were stable at 7.4 GW (20%), the grid data showed.