The Whole Story What Factors Impact Wholesale Energy Price
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www.energ.co.uk/procurement Wholesale energy prices: The basic drivers
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Get the full story on why wholesale energy prices in the UK change and what impacts this change.
Transcript of The Whole Story What Factors Impact Wholesale Energy Price
The energy market can be volatile, and in order to keep up with the very best
prices businesses need to stay one step ahead.
Find out which factors have an effect on energy prices, and what that effect will be.
Demand
DemandLower temperatures increase demand and put upward pressure on UK wholesale energy prices.
DemandLower temperatures increase demand and put upward pressure on UK wholesale energy prices.
Seasonally, wholesale energy prices in the UK tend to be lower in summer than in winter, when demand for heating and lighting is at its peak.
DemandLower temperatures increase demand and put upward pressure on UK wholesale energy prices.
Seasonally, wholesale energy prices in the UK tend to be lower in summer than in winter, when demand for heating and lighting is at its peak.
Very cold weather will support price rises as heating demand increases, and these price spikes can be more severe near the end of winter, especially if gas storage levels are low.
DemandLower temperatures increase demand and put upward pressure on UK wholesale energy prices.
Strong economic performance, particularly in energy intensive industries also increases demand and puts upward pressure on prices.
Seasonally, wholesale energy prices in the UK tend to be lower in summer than in winter, when demand for heating and lighting is at its peak.
Very cold weather will support price rises as heating demand increases, and these price spikes can be more severe near the end of winter, especially if gas storage levels are low.
DemandLower temperatures increase demand and put upward pressure on UK wholesale energy prices.
More efficient energy use, poor economic scenarios and carbon saving measures would all put downward pressure on prices.
Seasonally, wholesale energy prices in the UK tend to be lower in summer than in winter, when demand for heating and lighting is at its peak.
Very cold weather will support price rises as heating demand increases, and these price spikes can be more severe near the end of winter, especially if gas storage levels are low.
Strong economic performance, particularly in energy intensive industries also increases demand and puts upward pressure on prices.
Supply
Supply
The widespread use of intermediate renewables such as solar and wind power has a major impact on the supply side of the power market - windy and sunny days, for example, put downward pressure on prices whilst lack of wind generation during still winter days regularly causes power price spikes in the UK.
Supply
In the gas market, an unexpected outage at an offshore field or the re-direction of an anticipated LNG delivery have among the greatest potential impacts, which can drive prices up sharply.
The widespread use of intermediate renewables such as solar and wind power has a major impact on the supply side of the power market - windy and sunny days, for example, put downward pressure on prices whilst lack of wind generation during still winter days regularly causes power price spikes in the UK.
Supply
In the gas market, an unexpected outage at an offshore field or the re-direction of an anticipated LNG delivery have among the greatest potential impacts, which can drive prices up sharply.
Similarly, power station availability is critical, and any outages at key power stations will feed into price rises instantly.
The widespread use of intermediate renewables such as solar and wind power has a major impact on the supply side of the power market - windy and sunny days, for example, put downward pressure on prices whilst lack of wind generation during still winter days regularly causes power price spikes in the UK.
Fundamentals
FundamentalsBeneath the day-to-day events that impact gas and power wholesale energy prices, there are also underlying factors associated with the fundamental supply and demand situation.
This includes the ratio of overall supply to demand, and the price paid for fuel in generation and for gas
supply.
FundamentalsBeneath the day-to-day events that impact gas and power wholesale energy prices, there are also underlying factors associated with the fundamental supply and demand situation.
This includes the ratio of overall supply to demand, and the price paid for fuel in generation and for gas
supply.
As North Sea gas reserves have run down over the last
10 years, there has been marked upward pressure
on both gas and power UK wholesale energy prices as
more expensive gas imports drive up the marginal cost of
a kWh of power.
FundamentalsBeneath the day-to-day events that impact gas and power wholesale energy prices, there are also underlying factors associated with the fundamental supply and demand situation.
This includes the ratio of overall supply to demand, and the price paid for fuel in generation and for gas
supply.
As North Sea gas reserves have run down over the last
10 years, there has been marked upward pressure
on both gas and power UK wholesale energy prices as
more expensive gas imports drive up the marginal cost of
a kWh of power.
Associated with this is the price of Brent crude, which represents a global
indicator of the energy supply and demand balance,
and to which much of the international trade in gas is
linked.
The basic drivers
The basic driversThere are a whole host of factors that affect UK wholesale energy prices, including:
Weather and temperature Supply interruptions Wind and sun conditions
The basic driversThere are a whole host of factors that affect UK wholesale energy prices, including:
Weather and temperature Supply interruptions Wind and sun conditions
Maintenance Demand fluctuations - within day, and seasonal
Storage levels
The basic driversThere are a whole host of factors that affect UK wholesale energy prices, including:
Weather and temperature Supply interruptions Wind and sun conditions
Maintenance Demand fluctuations - within day, and seasonal
Storage levels
Production costs External energy prices Market efficiency
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Making Sense of Market Data: How to Harness the Energy Market
