Platts: UK gas-for-power demand falls to six-month low

LONDON -- UK electricity and natural gas prices in February retreated from winter highs as supply and demand concerns eased, according to S&P Global Platts data.

Photo Courtesy of Reuters.

Demand for natural gas from power stations fell to a six-month low on the back of weaker electricity demand, while both nuclear and renewable energy generation picked up in February.

UK gas-for-power demand fell 30% month on month in February to 1.56 Bcm, only marginally higher than the 1.51 Bcm recorded during the same month last year.

Gas-fired generation averaged close to 14 GW last month, down from 17.8 GW for January, falling from 45% of the UK's generation mix to 38% in a month-on-month comparison.

Meanwhile nuclear output rose from a 7.39 GW average in January to 8.06 GW in February, and renewable generation from 4.51 GW to 5.41 GW.

UK power imports rose from an average of 1.15 GW in January to 1.90 GW in February, further depressing the need to burn gas for power.

"Gas-for-power has still had an exceptional run this winter," said S&P Global Platts' Senior Gas Writer Stuart Elliott. "For the five months to end-February gas-for-power demand has totaled 9.98 Bcm, comfortably above the whole of Winter 2015-16 and closing in on the 10.93 Bcm recorded during Winter 2010-11."

While wholesale day-ahead prices for power and gas dipped in February, they remain much higher than a year ago. Both ScottishPower and npower said higher wholesale prices were a contributory factor in retail price hikes announced in February.

Looking ahead, March spot-delivered natural gas prices are likely to be pulled lower by weaker demand, with a rise in LNG deliveries and continuing Norwegian gas imports supporting a bearish outlook.

Beyond March, less gas injection demand expected this summer due to ongoing storage issues at CSL's Rough facility could see the bearish trend continue.

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