Total gas demand peaked at 420mcm, the highest level for six years, over 100mcm up from the previous week. Freezing temperatures as much as 10 degrees below seasonal normal drove up heating demand. Day-ahead gas prices reached £2/th by Thursday and National Grid was forced to issue a Grid Deficit Warning for the first time in eight years.
With the system forecast to not meet demand by the end of the day, this acted as a call for additional supplies. Within-Day prices hit 350p/th, helping to attract additional gas from Europe. Exports to the UK via BBL and the Interconnector had been reduced as the cold snap also affected the Continent. The UK was heavily reliant on storage, from medium-range and LNG. Medium-range stocks dropped more than 50% in seven days, while LNG sendout rose to record highs. At those withdrawal rates both medium-range and LNG stocks were expected to empty within seven days. The UK is now more vulnerable to any cold snaps during March with reserves depleted. However, price movement beyond the prompt contract was minimal with the problems short-term in nature. Longer-dated gas contracts fell across the week. With the harshest temperatures now passed, Day-ahead prices have returned to their pre cold levels.
The intense cold snap last week pushed Day-ahead power prices close to £100/MWh. Power demand peaked at a season-high of over 50GW on Thursday, as the end of the Triad period meant there were no industrial efforts to cut consumption.
The exceptionally high gas prices encouraged a switch to coal-fired generation. The UK’s entire coal fleet generated over 11GW of electricity for most of the week.
Wind output also peaked at more than 10GW, boosting supply during the coldest spell of the week. However, while Day-ahead prices close to doubled, contracts delivering beyond the prompt were unaffected by the short-term cold snap. Prices across the power curve fell around 1% with annual contracts remaining below their previous January and February peaks.
Prompt power prices have fallen back to £50/MWh today as temperatures have risen sharply.