Summer arrived in the UK last week, with temperatures in London hitting 28 degrees, the hottest April day since 1949. The arrival of bright, warm temperatures had a major influence on energy fundamentals, notably gas and electricity demand. The effect was heightened after the recent cold snaps experienced in the UK during March, following two separate bouts of snow and unseasonably cold temperatures.
As a result, the month-on-month fundamental changes have seen some remarkable movements.
On 18 March 2018, the maximum temperature in London for the day was just 0.5 degrees as the ‘Beast from the East’ returned for a second time. Temperatures fell 13 degrees in the two days beforehand and snowy weather conditions caused havoc across the UK.
Almost one month to the day later, and temperatures had increased by 27.5 degrees to the high of 28 degrees recorded in London. This is more than 10 degrees warmer than normal for the time of year.
The mild temperatures signalled a strong reduction in gas demand. Domestic LDZ demand dropped below 80mcm during last week (even lower at the weekend). This was a decrease of over 100mcm on just seven days earlier.
LDZ demand was over 200mcm higher in March when freezing conditions pushed heating demand to nearly 300mcm. By comparison, total gas demand this week, incorporating industrial, power station, storage injections and exports was just 170mcm.
The summer weather conditions brought hot temperatures and bright sunny skies to the UK, perfect for solar generation. Solar output last week peaked at 8.93GW, just 0.4GW below the all-time high. Solar generation was above 8GW on three days, and behind the meter generation from solar panels on homes and businesses triggered lunchtime demand dips of up to 5GW in electricity consumption.
Longer summer evenings play a major role in electricity usage. As skies do not darken until after 8pm, lighting consumption has fallen sharply in April. This was triggered by the switch to British Summer Time at the end of March. The weekly peak power demand has fallen 14GW (30%) from a high of 49GW at the end of March as snowy weather triggered additional electric heating demand.
Falling power demand and healthy renewable availability in the last week led to a strong reduction in coal use. In March, the cold temperatures saw power consumption spike to 49GW and low wind levels meant the grid relied on coal-fired power plants for supply. On 19 March 2018, coal-fired generation averaged 8GW during the 24-hour period, second only to gas plant in the generation mix and more than the country’s eight nuclear plant.
Fast forward four weeks, and the sharp decline in demand and high solar availability squeezed coal out of the fuel mix altogether. Last week, the UK recorded 55 hours of coal-free generation, surpassed earlier today with the grid going coal-free for more than 70 hours.
The weather changes seen between the winter and summer seasons have a strong influence on energy pricing, with temperatures a driving factor behind demand levels and the supply needed. The historical price difference between summer and winter contracts provided the basis for long-range gas storage, with reserves built up during the low demand summer months for use in the colder, higher demand winter period. However, it is rare to see such a marked shift in the weather-driven fundamentals over just a four-week period.
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