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UK gas-for-power demand hit 71-month high November 23

London — * 79 million cu m used for power generation
* November, Q4 on course for multi-year highs

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The amount of natural gas used by UK power stations to generate electricity neared a six-year high Wednesday, confirming the 2016 trend of gas -for-power demand posting large year-on-year gains, data from National Grid showed.

Gas-for-power demand in the UK hit 79 million cu m Wednesday, the highest for a single day since mid-December 2010, after having climbed from 74 million cu m Tuesday and 69 million cu m Monday.

This pushed the month-to-date average up close to the 70 million cu m/d mark, higher than the October average of 65 million cu m/d where total monthly gas-for-power demand was above the 2 Bcm mark for only the second time since January 2011.

Gas-for-power demand in the UK this year so far is almost 50% higher than the 2015 period on the back of coal-fired power plant closures and more favorable generation economics.

Moreover, cumulative gas-for-power demand since the beginning of the winter-delivery period on October 1 of 3.6 Bcm is already closing in on the Q4 2015 total of 3.7 Bcm and is on course to be the highest for a fourth quarter this decade.

The month-ahead clean spark spread -- the theoretical margin available to a 50%-efficient HHV gas-fired power plant including emissions -- was assessed at GBP24.253/MWh Wednesday by S&P Global Platts, with the quarter-ahead equivalent at GBP20.876/MWh.

However, gas-fired generation economics were expected to become tighter in the short term with the Summer 2017 spark spread at GBP6.135/MWh and the Summer 18 peer at GBP2.688/MWh.

Nonetheless, with coal-fired power plants expected to be more expensive to run than gas-fired power plants in the coming years, gas can be expected to continue to be the majority fuel in the UK generation mix in the coming years despite the narrower spreads.

--Gary Hornby,
--Edited by Dan Lalor,