UK day-ahead power prices rose sharply on Monday as an extension of the unplanned outage on the UK-French IFA interconnector, amid steady wind and higher power demand forecasts, sparked supply concerns.
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Baseload power for Tuesday delivery climbed more than GBP11 above Friday's assessment for Monday to reach GBP73.75/MWh before S&P Global Platts' 11 am London time market close.
Similarly on the UK spot auction, day-ahead base cleared at GBP69.47/MWh, while the peak spot auction price settled at a two-week high of GBP94.40/MWh, the strongest value since November 14 clearing price of GBP128.30/MWh, according to N2EX and APX exchanges data.
Surplus margins for Tuesday are set to tighten to below 8 GW, compared with nearly 9.5 GW on Monday, on the back of steady wind supplies, which are expected to remain at 2.5 GW on both the days, while further delays to the return of 2 GW IFA interconnector to full capacity also hit supplies.
National Grid on Monday confirmed that four of the eight IFA power cables "have been severed which will result in a reduction of the IFA maximum capability to 1,000 MW for an extended period of time."
At around midday Monday, wind power supplies stood at 1.5 GW, accounting for less than 4% of the UK energy mix, while no French imports were flowing through the IFA link, the grid data showed.
Gas-fired power generation reached 22 GW, representing more than half of the electricity supplies, while coal and nuclear power production was at 5.6 GW and 8.3 GW respectively.
The UK Met Office said it expects parts of the UK will remain cold on Monday, with lows of minus 6 degrees Celsius expected in southeast England, and continue to remain cold on Tuesday.
This increased demand for power as heating fuel, with National Grid estimating power demand to peak at 51.2 GW on Tuesday, up from 48.8 GW on Monday.