London — UK day-ahead power prices rose sharply on Monday as forecasts predict a steep drop in wind power generation to below 500 MW, while rising gas prices also supported the prompt, sources said.
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Price of baseload and peakload power for Tuesday delivery surged to GBP38/MWh and GBP42.50/MWh before S&P Global Platts 11:00 am London time market close, both up GBP1.10 from Friday's assessment for Monday.
The UK's base day-ahead action settled nearly 50 pence higher than the OTC contract at GBP38.48/MWh on Monday, data from the exchanges N2EX and APX showed. Similarly, the peak day-ahead auction price cleared at GBP42.94/MWh.
According to National Grid, peak power demand is expected to rise to 35.5 GW on Tuesday, up from Monday's peak demand forecast of 33.9 GW, while at the same time wind power output is likely to dive to 452 MW on Tuesday, compared with 792 MW on Monday.
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This is likely to tighten surplus margins to 10.3 GW on Tuesday, narrowing from nearly 13 GW on Monday, the grid data showed.
In addition to tightening supply margins, bullish sentiment on the gas hub supported higher prompt power prices. On the NBP gas hub, the within-day and day-ahead contracts were trading at 35.90 pence/therm and 35.60 p/th, higher than Friday's close.
Meanwhile, CustomWeather expects weather conditions across the UK to stay above seasonal norms over the next two days, with temperatures in London and Birmingham likely to rise 1-4 degrees Celsius above average.
On the supply side, gas-fired power plants produced nearly 49% of the UK's electricity, generating 15 GW of power midday Monday, offsetting lower wind power generation of 382 MW.
Coal and nuclear plants contributed 2.6 GW and 7.3 GW of power to the grid, accounting for 8.5% and 24% of the fuel mix, the grid said. Dutch and French imports into the UK were stable at 1 GW (3.3%) and nearly 2 GW (6.5%) respectively.