Analysis by market intelligence firm ICIS has revealed that UK wholesale gas averaged 32p/th in the first quarter of the year––the lowest quarterly average in 10 years. The figure was 12.5% below the average for the fourth quarter of 2015.
Average wholesale power prices for the quarter stood at £35/MWh, a nine-year low, and down 12% on the average for Q415.
Gas demand for the first quarter rose 3% year-on-year at 26.8bcm, although mild winter temperatures kept household demand lower. Some of this lower residential heating demand was offset by additional gas-fired power generation during the first quarter, which has helped to support gas and power prices for long-term delivery.
However, concern was raised over the price of power for the upcoming winter. Zoe Double, head of power at ICIS said: “Some older coal-fired plants closed during Q116, so with less flexible supply available to the market, market participants are reluctant to sell power for winter delivery at lower prices because of the risk of shortages.”