Seven Year UK Energy Price Forecast Update Oil, Gas and Power Prices to 2021 - A Unique Perspective
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Seven Year UK Energy JANUARY 2015
Price Forecast Update
Oil, Gas and Power Contents
Prices to 2021 Summary
Economy
Crude Oil
Gas
Power
A Unique PerspectiveSummary
table 1: energyquote jha Oil, Gas and power Summary
2014 2015 2016 2017 2018 2019 2020 2021
OIL: $ per bbl 99.5 59.5 75.8 78.2 79.8 83.7 88.4 90.1
GAS: p/th 46.3 51.7 49.3 53.1 48.8 51.3 50.2 51.0
POWER: £/MWh 40.9 44.9 51.9 51.7 51.5 51.4 47.2 46.6
Whilst both the global, European and UK economies will continue to see economic growth over the next couple of years, GDP will increase at a
lower rate than previously forecast. Weaker investment, deflation concerns in the Eurozone and a slowdown in China are the key drivers behind
the lower forecast. Crude prices are likely to stay at current levels for at least the first half of this year, until the market clears the excess supply.
Gas prices will be impacted by movements in the crude price and increasing LNG supplies. The geopolitical risk from the Russia/Ukraine conflict
has abated for the time being. Power prices will be affected by tighter margins, as coal fired plant closes.
Economy will also remain subdued due to slack in the labour market and subdued
productivity growth. It is estimated that CPI inflation will average, 2.0 per
cent over the next two years.
Global growth in 2015/16 is projected by the IMF to be at 3.5 and 3.7
percent, a downward revision of 0.3 percent relative to their October
forecast. The revision was due to a number of reasons:
Crude Oil
First, oil prices in US dollars have declined by about 55 percent since
The US Energy Information Administration (EIA) estimated that global
September. The decline is partly due to unexpected demand weakness in
consumption grew by 0.9 million bbl/d in 2014, averaging 91.4 million
some major economies, in particular, emerging market economies. But the
bbl/d for the year. It expects global consumption to grow by 1.0 million
much larger decline in oil prices suggests an important contribution of oil
bbl/d in both 2015 and 2016. Non-OECD consumption, grew by 1.2
supply factors, including the decision of the Organization of the Petroleum
million bbl/d in 2014, is projected to grow by 0.9 million bbl/d in 2015 and
Exporting Countries (OPEC) to maintain current production levels despite
1.1 million bbl/d in 2016. The biggest reduction in forecast non-OECD
the steady rise in production from non-OPEC producers, especially the US.
consumption growth in 2015 comes from a 0.2-million-bbl/d decline
in Russian consumption because of its economic downturn. Russia’s
Second, while global growth increased broadly as expected to 3¾ percent consumption is expected to decline by a similar amount in 2016. China
in the third quarter of 2014, up from 3¼ percent in the second quarter, this is the leading contributor to projected global consumption growth, with
masked marked growth divergences among major economies. Specifically, consumption expected to increase by an annual average of 0.3 million bbl/d
the recovery in the US was stronger than expected, while economic over the next two years.
performance in all other major economies—most notably Japan—fell short
of expectations. The weaker-than-expected growth in these economies
OECD consumption, which fell by 0.3 million bbl/d in 2014, is expected
is largely seen as reflecting ongoing, protracted adjustment to diminished
to grow by 0.1 million bbl/d in 2015 and remain relatively flat in 2016.
expectations regarding medium-term growth prospects
Japan and Europe accounted for almost the entire decline in 2014 and are
expected to continue to decline over the next two years, albeit at a lesser
Third, with more marked growth divergence across major economies, the rate than in 2014. The US is the leading contributor to projected OECD
US dollar has appreciated some 6 percent in real effective terms relative consumption growth, with U.S. consumption increasing by 0.3 million bbl/d
since October 2014. In contrast, the euro and the yen have depreciated by in 2015 and 0.1 million bbl/d in 2016
about 2 percent and 8 percent, respectively, and many emerging market
currencies have weakened, particularly those of commodity exporters.
The EIA estimates that non-OPEC production grew by 2.0 million bbl/d
in 2014, averaging 56.2 million bbl/d for the year. Non-OPEC supply
Fourth, interest rates and risk spreads have risen in many emerging market growth is expected to slow over the next two years mostly because of
economies, notably commodity exporters, and risk spreads on high-yield lower projected oil prices. Non-OPEC production is predicted to grow by
bonds and other products exposed to energy prices have also widened. 0.7 million bbl/d in 2015 and 0.5 million bbl/d in 2016, with the US as the
Long-term government bond yields have declined further in major advanced leading contributor. The slower growth in total non-OPEC supply is largely
economies, reflecting safe haven effects and weaker activity in some, while attributable to slower production growth in the US, Canada, and Central and
global equity indices in national currency have remained broadly unchanged South America. Additionally, production in Europe and Eurasia is projected
since October. to decline.
The Eurozone is turning the corner from recession to recovery. Growth is OPEC crude oil production averaged 29.9 million bbl/d in 2014, a slight
projected to strengthen to 1 percent in 2014 and 1.4 percent in 2015, decline from the previous year. EIA expects OPEC crude oil production
but the recovery will be uneven. The pickup will generally be more modest to remain flat in 2015 and fall by 0.3 million bbl/d in 2016. Iraq will be
in economies under stress, despite some upward revisions including OPEC’s largest contributor of growth over the next two years, but its growth
Spain. Activity in the UK has been buoyed by easier credit conditions and is expected to be offset by production declines from other Persian Gulf
increased confidence. Growth is expected to average 2¼ percent in 2015– producers. Geopolitical issues remain a risk. The threat of the Islamic State
16, but economic slack will remain high. (ISIL) on northern Iraqi production and exports still looms as does the
unrest in Libya.
Inflation in the UK and in the Eurozone is expected to remain low reflecting
low food and energy price. These lower prices reflect falls in global The EIA expects global oil inventories to continue to build in 2015, keeping
commodity prices, which in turn reflect both the slowdown in global demand downward pressure on oil prices. The downward price pressures will
and positive news about supply. Cost pressures from the labour market be concentrated in the first half of 2015 when global inventory builds
02 Copyright © EQJHA Limited trading as EnergyQuote JHA: Seven Year UK Energy Price Forecast is published quarterly by EnergyQuote JHAare expected to be particularly strong. Eventually, the market will clear will be required, adding further costs to the consumer. As the economic
its excesses and, in the absence of some shock, prices should reach an recovery accelerates, demand will increase. However, demand growth will
equilibrium later this year. The drop in oil prices has accelerated in recent be constrained by greater energy efficiency and a trend towards more self-
weeks, as leading OPEC members such as Saudi Arabia and Kuwait have generation among large users.
resisted calls to cut production. The new Saudi King, Salman bin Abdulaziz
has pledged continuity, therefore it looks unlikely that the kingdom will alter oil A capacity market has been established which should reduce the likelihood
production in the coming months. of future blackouts by ensuring there is sufficient reliable capacity to meet
demand. The first auction took place in December 2014 and a total 49.3 GW
Gas
has been awarded. Thermal coal prices will continue to be subdued for the
immediate future as new supplies outpace demand growth but may rise in
late 2015 as Asian demand picks up. Coal prices have dropped by around 45
Currently around half of European gas volumes are linked to oil prices rather percent in the past three years as healthy production in exporter countries
than hub pricing. The drop in the oil price since last Summer and the prospect such as Australia, South Africa, Colombia and the United States clashed with
of a period of low oil prices going forward, will ensure that natural gas prices sluggish demand in Europe and increasingly Asia.
should remain low for the foreseeable future.
UK Coal fired plants have been affected by the EU Large Combustion
Concerns that Russia may cut off gas deliveries to Europe over the ongoing Plant Directive (LCPD), which limits emissions of pollutants from all power
Ukraine crisis seems to have diminished. The European Commission helped plants. Those plants that have chosen to ‘opt out’ of the implementation of
negotiate a ‘winter gas deal package’ which meant Kiev resumed buying the required technologies to meet the emissions standards of the directive
Russian gas at a price of $378 per 1,000 cubic metres in the fourth quarter must close once they have operated for a maximum of 20,000 hours from
of 2014. That price included a discount of $100 per 1,000 cubic metres. 1 January 2008 to 31 December 2015. By the end of 2015, 11.5 GW of
The agreement expires on April 1 2015. It is unclear whether Russia would coal and oil plant will have closed as a result of the LCPD. Another directive,
be willing to offer a discount on any renegotiated contract. Tax revenue from The Industrial Emissions Directive (IED), will have an additional impact. This
Gazprom is increasingly needed as companies all but cut off from global directive consolidates the LCPD with six other existing directives, and will
capital markets due to Western sanctions over Ukraine turn to the state for impose more stringent emissions limits on large combustion plant. Existing
funds to stay afloat. Although negotiations will be tough, it is unlikely Russia plant will be able to ‘opt in’ either by committing to the directive’s emission
will not come to an agreement to the Ukraine for the delivery of gas. limit values from 2016, or by entering into a Transitional National Plan from
2016–2020 and fully complying with the emission limit values from 2020.
In any case Europe is less reliant on the Ukraine link, with improved gas Opted-out plant will be permitted to operate for a maximum of 17,500 hours
infrastructure now meaning supplies could go via alternative routes in the between 2016 and 2023, after which they must close.
increasingly unlikely event of disruption, for example the Nord Stream
pipeline. Also, there is the potential to import more supplies from more diverse Magnox has been given consent to extend the life of its Wylfa reactor until
sources, such as LNG from Qatar. The economic performance of the UK and December 2015 by transferring the fuel from unit 2. It was due to close in
Europe’s economy is also a crucial determinant of gas demand. Although the September 2014. A 5-year life extension has been granted to the Hartlepool
UK is growing, there are concerns over the slowing down of growth in the plant, taking the decommissioning date to 2024.
Eurozone, which will suppress demand.
The 880MW Carrington CCGT is currently under construction and is
UK gas production will continue to decline, albeit at a slower rate. However, expected to be operational next year. There are no other new gas fired plants
the restarting of Japanese nuclear reactors should provide more LNG at under construction. Now that the market electricity reforms are in place, more
more competitive prices for delivery. Some reductions in Norwegian supplies investment is likely to come on line, though it will take at least three years for
are likely to be seen between 2016 and 2019, leading to increased reliance this to have a bearing on margins. Over 7.8GW of onshore wind capacity has
on gas from alternative sources. already been built and 1.5GW is under construction. There is a further 5.3GW
with planning consent and 6.4GW in the process of applying for planning
There is a significant potential for the development of a shale gas industry in consent. Offshore wind capacity is also increasing exponentially. In addition to
the UK. The EIA has estimated that there are more than 700 million barrels the offshore wind capacity already installed, 10.8GW is either in construction
of oil in the counties of Sussex and Surrey, close to the London metropolitan or has planning approval, and a further 5.8GW is in the planning system.
area. Given the great success of shale oil and gas in the US in reducing
import dependency, and boosting the economy, the UK Government is keen
to replicate this success. To aid the development of a shale oil and gas sector, ElecLink is planning a 1GW interconnector with France, which would be
it is putting in place a package of incentives to encourage investment and routed through the channel tunnel. It could be operational in 2016. National
get communities behind plans to exploit this resource. Although the right Grid is actively working on a number of projects that could link the UK with
commercial environment is starting to take shape, there are major constraints Belgium, Norway and another link with France. None of these are expected to
to the development of a shale oil and gas sector in Great Britain, not least be complete before 2018. Further potential projects include links with Ireland,
expertise and technology. It is not expected that sufficient supplies of shale Denmark and Iceland.
gas will come on-line during the forecast period to have any significant
bearing on gas prices. Concerns at a local level could also halt or delay
projects. Just recently Lancashire County Council planners recommended
rejecting a fracking application due to noise and traffic problems.
Power
Increasingly over the period renewables will form a greater part of the energy
mix, as the UK seeks to move towards meeting the aim of achieving the EU
target of having a 20 percent share of renewables in the energy mix by 2020.
Whilst the marginal cost of wind energy for example is negligible, high capital
costs will need to be recovered. Furthermore, use of gas as back-up supply
03 Copyright © EQJHA Limited trading as EnergyQuote JHA: Seven Year UK Energy Price Forecast is published quarterly by EnergyQuote JHAAppendix
table 2: energyquote jha forecast brent crude spot prices ($/bbl)
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014
Month Forecast 107.5 108.9 107.7 108.1 109.4 112.2 108.0 103.2 98.5 88.1 79.5 63.0
Year Average 2014 99.5 Year Average Percentage Increase -8.5
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015
Month Forecast 50.3 50.2 53.3 55.6 57.3 57.7 59.4 64.6 66.8 66.0 66.8 65.9
Year Average 2015 59.5 Year Average Percentage Increase -40.2
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016
Month Forecast 67.0 70.0 72.0 76.9 77.8 77.7 80.3 80.8 81.3 78.3 76.1 71.4
Year Average 2016 75.8 Year Average Percentage Increase 27.4
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017
Month Forecast 69.4 72.4 74.4 79.3 80.2 80.1 82.7 83.2 83.7 80.7 78.5 73.8
Year Average 2017 78.2 Year Average Percentage Increase 3.1
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018
Month Forecast 76.5 72.7 76.3 78.7 78.9 81.5 81.8 83.7 84.0 84.4 81.2 77.8
Year Average 2018 79.8 Year Average Percentage Increase 2.0
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019
Month Forecast 76.3 78.2 78.4 81.0 85.2 85.4 87.2 87.4 87.7 84.9 85.7 86.7
Year Average 2019 83.7 Year Average Percentage Increase 4.8
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020
Month Forecast 87.5 87.0 89.5 88.9 88.5 88.4 88.1 87.9 88.5 88.7 89.0 89.0
Year Average 2020 88.4 Year Average Percentage Increase 5.6
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
2021 2021 2021 2021 2021 2021 2021 2021 2021 2021 2021 2021
Month Forecast 89.2 88.9 88.4 88.2 90.8 90.7 90.4 90.2 90.8 91.0 91.3 91.3
Year Average 2021 90.1 Year Average Percentage Increase 1.9
4 Copyright © EQJHA Limited trading as EnergyQuote JHA: Seven Year UK Energy Price Forecast is published quarterly by EnergyQuote JHAAppendix – continued
table 3: energyquote jha Forecast Gas day ahead prices (ppt)
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2014 2014 2014 2014 2014 2014 2014 2014 2014 2015 2015 2015
Month Forecast 49.9 45.5 39.5 37.6 40.6 48.6 50.4 54.8 53.9 45.8 44.8 44.6
April Year Average 2014 46.3 Year Average Percentage Increase -28.3
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2015 2015 2015 2015 2015 2015 2015 2015 2015 2016 2016 2016
Month Forecast 43.5 42.7 44.4 42.7 46.8 50.9 55.4 59.7 61.4 58.9 57.3 57.3
April Year Average 2015 51.7 Year Average Percentage Increase 11.6
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2016 2016 2016 2016 2016 2016 2016 2016 2016 2017 2017 2017
Month Forecast 42.3 41.3 40.5 42.2 40.5 44.6 50.5 57.6 60.4 59.0 58.7 54.0
April Year Average 2016 49.3 Year Average Percentage Increase -4.8
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2017 2017 2017 2017 2017 2017 2017 2017 2017 2018 2018 2018
Month Forecast 52.2 51.8 51.5 51.2 53.0 54.6 56.3 55.9 55.0 54.5 50.9 51.2
April Year Average 2017 53.1 Year Average Percentage Increase 7.9
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2018 2018 2018 2018 2018 2018 2018 2018 2018 2019 2019 2019
Month Forecast 49.7 47.2 45.3 45.3 46.3 47.2 48.1 50.7 51.7 51.4 51.9 50.6
April Year Average 2018 48.8 Year Average Percentage Increase -8.2
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2019 2019 2019 2019 2019 2019 2019 2019 2019 2020 2020 2020
Month Forecast 49.8 48.1 48.7 51.2 49.8 49.7 50.2 52.9 54.3 54.4 53.9 52.2
April Year Average 2019 51.3 Year Average Percentage Increase 5.2
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2020 2020 2020 2020 2020 2020 2020 2020 2020 2021 2021 2021
Month Forecast 50.5 49.4 48.0 48.3 48.1 48.1 49.2 50.5 51.5 52.5 53.1 52.9
April Year Average 2020 50.2 Year Average Percentage Increase -2.1
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2021 2021 2021 2021 2021 2021 2021 2021 2021 2022 2022 2022
Month Forecast 51.3 50.2 48.8 49.1 48.9 48.9 50.0 51.3 52.3 53.3 53.9 53.7
April Year Average 2021 51.0 Year Average Percentage Increase -1.6
5 Copyright © EQJHA Limited trading as EnergyQuote JHA: Seven Year UK Energy Price Forecast is published quarterly by EnergyQuote JHAAppendix – continued
Table 4: energyquote JHA forecast gas delivered prices (ppt)
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2014 2014 2014 2014 2014 2014 2014 2014 2014 2015 2015 2015
Month Forecast 65.8 61.4 55.4 53.5 56.5 64.5 66.3 70.7 69.8 61.7 60.7 60.4
April Year Average 2014 62.2 Year Average Percentage Increase -22.3
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2015 2015 2015 2015 2015 2015 2015 2015 2015 2016 2016 2016
Month Forecast 59.8 59.0 60.7 59.0 63.1 69.2 73.6 77.9 79.6 77.1 75.5 75.5
April Year Average 2015 67.8 Year Average Percentage Increase 8.9
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2016 2016 2016 2016 2016 2016 2016 2016 2016 2017 2017 2017
Month Forecast 60.9 59.9 59.1 60.8 59.1 63.2 69.1 76.2 79.0 77.6 77.3 72.6
April Year Average 2016 65.6 Year Average Percentage Increase -3.2
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2017 2017 2017 2017 2017 2017 2017 2017 2017 2018 2018 2018
Month Forecast 71.4 71.0 70.7 70.4 72.2 73.8 75.5 75.1 74.2 73.2 69.6 69.9
April Year Average 2017 70.0 Year Average Percentage Increase 6.7
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2018 2018 2018 2018 2018 2018 2018 2018 2018 2019 2019 2019
Month Forecast 69.0 66.5 64.6 64.6 65.6 66.5 67.4 70.0 71.0 70.5 71.0 69.7
April Year Average 2018 66.2 Year Average Percentage Increase -5.5
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2019 2019 2019 2019 2019 2019 2019 2019 2019 2020 2020 2020
Month Forecast 69.5 67.8 68.4 70.9 69.5 69.4 69.9 72.6 74.0 74.1 73.6 71.9
April Year Average 2019 69.2 Year Average Percentage Increase 4.6
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2020 2020 2020 2020 2020 2020 2020 2020 2020 2021 2021 2021
Month Forecast 70.8 69.7 68.3 68.6 68.4 68.4 69.5 70.8 71.8 72.8 73.4 73.2
April Year Average 2020 68.7 Year Average Percentage Increase -0.8
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2021 2021 2021 2021 2021 2021 2021 2021 2021 2022 2022 2022
Month Forecast 70.8 69.7 68.3 68.6 68.4 68.4 69.5 70.8 71.8 72.8 73.4 73.2
April Year Average 2021 70.1 Year Average Percentage Increase 2.0
6 Copyright © EQJHA Limited trading as EnergyQuote JHA: Seven Year UK Energy Price Forecast is published quarterly by EnergyQuote JHAAppendix – continued
table 5: energyquote jha forecast power day ahead prices (£/MWh)
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2014 2014 2014 2014 2014 2014 2014 2014 2014 2015 2015 2015
Month Forecast 41.8 39.9 36.7 35.5 37.8 43.1 44.9 48.1 43.1 39.1 37.6 42.7
April Year Average 2014 40.9 Year Average Percentage Increase -15.8
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2015 2015 2015 2015 2015 2015 2015 2015 2015 2016 2016 2016
Month Forecast 40.5 39.2 38.8 43.4 44.9 45.3 49.2 51.9 48.4 45.1 45.0 46.6
April Year Average 2015 44.9 Year Average Percentage Increase 9.8
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2016 2016 2016 2016 2016 2016 2016 2016 2016 2017 2017 2017
Month Forecast 45.9 48.8 49.3 49.9 53.2 54.5 58.8 59.5 54.0 50.6 49.8 48.7
April Year Average 2016 51.9 Year Average Percentage Increase 15.7
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2017 2017 2017 2017 2017 2017 2017 2017 2017 2018 2018 2018
Month Forecast 47.7 49.1 47.7 47.1 50.1 51.4 55.2 58.8 56.5 52.9 52.1 51.5
April Year Average 2017 51.7 Year Average Percentage Increase -0.5
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2018 2018 2018 2018 2018 2018 2018 2018 2018 2019 2019 2019
Month Forecast 51.1 50.6 49.5 49.1 51.2 54.0 54.8 55.8 55.1 51.3 49.1 46.9
April Year Average 2018 52.1 Year Average Percentage Increase -0.9
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2019 2019 2019 2019 2019 2019 2019 2019 2019 2020 2020 2020
Month Forecast 47.7 48.3 50.8 48.9 49.3 54.2 55.3 56.0 53.4 52.7 50.4 49.4
April Year Average 2019 51.5 Year Average Percentage Increase -0.3
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2020 2020 2020 2020 2020 2020 2020 2020 2020 2021 2021 2021
Month Forecast 48.2 46.2 45.0 44.4 45.3 46.2 47.5 47.9 49.9 49.7 48.7 47.5
April Year Average 2020 47.2 Year Average Percentage Increase -8.1
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2021 2021 2021 2021 2021 2021 2021 2021 2021 2022 2022 2022
Month Forecast 45.5 44.3 43.7 44.6 45.5 46.8 47.2 49.2 47.8 49.4 48.4 47.2
April Year Average 2021 46.6 Year Average Percentage Increase -1.2
7 Copyright © EQJHA Limited trading as EnergyQuote JHA: Seven Year UK Energy Price Forecast is published quarterly by EnergyQuote JHAAppendix – continued
table 6: energyquote jha forecast power delivered prices (£/MWh)
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2014 2014 2014 2014 2014 2014 2014 2014 2014 2015 2015 2015
Month Forecast 78.9 76.9 73.8 72.5 74.8 80.2 82.1 85.2 80.2 76.2 74.6 79.8
April Year Average 2014 77.9 Year Average Percentage Increase -3.4
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2015 2015 2015 2015 2015 2015 2015 2015 2015 2016 2016 2016
Month Forecast 80.7 79.4 79.0 83.7 85.2 85.6 89.5 92.2 88.6 85.3 85.3 86.8
April Year Average 2015 85.1 Year Average Percentage Increase 9.2
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2016 2016 2016 2016 2016 2016 2016 2016 2016 2017 2017 2017
Month Forecast 89.7 92.6 93.1 93.7 97.1 98.4 102.7 103.4 97.9 94.4 93.6 92.5
April Year Average 2016 95.8 Year Average Percentage Increase 12.5
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2017 2017 2017 2017 2017 2017 2017 2017 2017 2018 2018 2018
Month Forecast 93.7 95.1 93.7 93.0 96.1 97.4 101.2 104.9 102.5 98.9 98.1 97.5
April Year Average 2017 97.7 Year Average Percentage Increase 2.0
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2018 2018 2018 2018 2018 2018 2018 2018 2018 2019 2019 2019
Month Forecast 99.6 99.1 98.0 97.6 99.7 102.5 103.3 104.3 103.6 99.8 97.5 95.4
April Year Average 2018 100.0 Year Average Percentage Increase 2.4
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2019 2019 2019 2019 2019 2019 2019 2019 2019 2020 2020 2020
Month Forecast 98.8 99.5 102.0 100.1 100.4 105.4 106.5 107.2 104.6 103.8 101.6 100.5
April Year Average 2019 102.5 Year Average Percentage Increase 2.5
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2020 2020 2020 2020 2020 2020 2020 2020 2020 2021 2021 2021
Month Forecast 102.2 100.2 99.0 98.4 99.4 100.3 101.6 102.1 104.1 104.0 103.0 101.8
April Year Average 2020 101.3 Year Average Percentage Increase -1.1
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
2021 2021 2021 2021 2021 2021 2021 2021 2021 2022 2022 2022
Month Forecast 102.8 101.6 101.0 102.0 102.9 104.3 104.7 106.8 105.3 107.0 106.0 104.8
April Year Average 2021 104.1 Year Average Percentage Increase 2.7
8 Copyright © EQJHA Limited trading as EnergyQuote JHA: Seven Year UK Energy Price Forecast is published quarterly by EnergyQuote JHAAppendix – continued
glossary of terms
AUTOGENERATION: Electricity generated for a company’s own join a CCA.
use.
CLIMATE CHANGE LEVY (CCL): Tax introduced in April 2001
AVAILABILITY: The agreed level of supply capacity made available designed to provide an incentive to meet the UK’s environmental
by both the networks and contracted for by the suppliers to meet the commitments made at the Kyoto Conference. Levy is based on the
consumer’s highest likely monthly demand – measured in kVA. The amount of energy supplied to an enduser – electricity, coal, gas and
site cannot exceed this specified amount without financial penalty and LPG – and only applies to the industrial and commercial sector.
a modified connection agreement. Certain intensive energy users have been granted discounts, up to
80%, from the levy in return to reaching agreed emissions reduction
AVAILABILITY CHARGE: Availability Charges are based on an
targets.
agreed level of required capacity and should be set at just above the
anticipated Maximum Demand. The standard method is to multiply the COMBINED HEAT AND POWER (CHP): CHP, or cogeneration,
maximum demand by 1.2. simultaneously generates useable heat and power in a single process,
often installed on the site of industrial plant.
BACKWARDATION: When the price of near delivery months of
futures or physicals contrasts, trades at a premium to more distant CONTANGO: Market situation in which prices in succeeding
months, i.e. future prices are lower than current prices (also known as delivery months are progressively higher than in the nearest
an inverted market). delivery month (also known as Forwardation and is the opposite of
Backwardation).
BALANCING MECHANISM (BM): Mechanism operated by the
National Grid Company (NGC) to balance supply and demand on a CURVE: The curve, so-called because its components form a curve
half hourly basis. when plotted, is made up of those periods following the end of the
present calendar month.
BASELOAD: The load continuously supplied by generators into the
electricity networks over a period of time which demand does not fall DAY AHEAD (D-1): The price of a commodity for delivery on the
below. following day.
BEARISH: A market in which prices are falling. DISTRIBUTION: Transportation of electrical energy from the Grid
Supply Point (GSP) to the customer’s intake point.
BETTA: British Electricity Trading and Transmission Arrangements
– extension of NETA to include Scotland. Trading and transmission DISTRIBUTION LOSSES: Charges relating to electrical losses
access will be governed by a single set of rules. Came into effect 1 which occur as electricity is transmitted through the lines of the DNO.
April 2005.
DISTRIBUTION NETWORK OPERATOR (DNO): The
BRENT: Commercial UK North Sea oil field – Brent Crude is widely DNO manages the installation and upkeep of their cabling, and the
used as a standard or reference price against which other crude oil distribution of electricity to the supply point. They are also often
grade prices may be fixed. referred to as the host REC (Regional Electricity Company).
BSC: Balancing and Settlements Code – rules governing the DUAL FIRING: Where power stations have the ability to burn more
operation of the balancing mechanism and the imbalance settlement than one type of fuel, typically coal and gas, coal and oil or oil and gas.
process and the relationships and responsibilities of all electricity
DUoS: Distribution Use of Systems – charge levied by the DNO for
market participants.
the transmission of electricity through its local network.
BSUoS: Balancing service use of system charges - A charge levied
EHV: Extra High Voltage.
to cover the Balancing Market. Component costs include internal &
external system operator settlement periods ELEXON: ELEXON is the Balancing and Settlement Code Company
– procuring and providing services to administer and implement the
BULLISH MARKET: A market in which prices are rising.
balancing and settlement rules. Signatories to the BSC contribute to
CARBON INTENSITY: With reference to a power station, it is the the costs of ELEXON. Elexon charges are levied to recover the costs
ratio between the carbon emitted and power generated. of running ELEXON. (www.elexon.co.uk)
CCT: Clean Coal Technology. Technologies used to reduce the EMBEDDED GENERATION: Electricity generation by plant which
emissions that are produced as a bi-product of burning coal. For has been connected to the distribution networks of the DNOs rather
example, FGD. than directly to the NGC’s transmission systems.
CCGT: Combined Cycle Gas Turbine – a technology which combines EMISSION ALLOWANCE: Typically, emissions reduction schemes
gas turbines and steam turbines, connected to one or more electrical set a cap for total emissions for each participant over a period and
generators at the same plant. allocate each participant tradable units, called emissions allowances,
up to the cap. Participants buy and sell emissions allowances and at
CLIMATE CHANGE AGREEMENT (CCA): Certain intensive
the end of the period must hold allowances or credits equal to their
energy users have been granted discounts to the Climate Change
actual emissions to be in compliance. See EU allowances and UK
Levy, up to 80%, in return to reaching agreed emissions reduction
Allowances.
targets. The energy user must join a Climate Change Agreement
through their sector association in order to take part in the scheme.
The energy user must meet certain criteria in order to be eligible to
9 Copyright © EQJHA Limited trading as EnergyQuote JHA: Seven Year UK Energy Price Forecast is published quarterly by EnergyQuote JHAAppendix – continued
glossary of terms – continued
ENERGY INTENSITY: The intensity of energy use, measured by LIQUEFIED NATURAL GAS (LNG): Oilfield or naturally
energy consumption relative to the value of manufactured products. occurring gas, chiefly methane, liquefied for transport or storage.
ENERGY-ONLY CONTRACT: Contract based on agreed prices, LIQUID MARKET: Market in which buying and selling can be
including the supplier’s margin, for the supply of electricity, with accomplished with minimal changes in price. Market in which there
other charges passed through at cost. are sufficient trades to accurately reflect fundamental influences on
the market price.
FGD: Flue Gas Desulphurisation. A technology used by power
plants that employs a sorbent, usually lime or limestone, to remove LOSS OF LOAD PROBABILITY (LOLP): Figure used in the
sulphur dioxide from the gases produced by burning fossil fuels. calculation of the Capacity Payment, which relates to the probability
that demand for electricity will exceed supply.
FIRST TIER SUPPLY: A regulatory term used in electricity
regulation to describe the supply of electricity from the incumbent LV: Low Voltage – supply voltage below 1000volts.
local electricity company, i.e. host REC.
MAXIMUM DEMAND: The highest average demand occurring
FIXED DAY AND NIGHT: Simplest type of contract for in a half hour period. Maximum Demand tariffs comprise: a) fixed
electricity with different unit prices for daytime and night time. monthly charge; b) an availability charge per kVA of the highest
demand expected; c) a price per unit for day and night units; d)
FORWARD CONTRACT: As a futures contract (below) but terms
a maximum demand charge based on the measured maximum
are privately negotiated and not standardised.
number of units used in one half hour period in the month.
FUTURES CONTRACT: An agreement to purchase or sell a
MW: Megawatt – 1,000 kW.
commodity for delivery in the future
GAS YEAR: Period commencing 0600 1st October through to NATIONAL GRID: National Grid provide gas transportation,
0600 1st October the following year. metering and meter reading services throughout Great Britain for
the companies that supply domestic, industrial and commercial
GATE CLOSURE: In relation to a Settlement Period. It defines
consumers.
the moment when bilateral contracting ends and the Balancing
Mechanism for each associated trading period begins. NATIONAL TRANSMISSION SYSTEM (NTS): The high
pressure network of pipes that transports gas between the
GSP: Grid Supply Point – point between Transmission and
terminals, storage facilities and Local Distribution Zones for local
Distribution systems where responsibility for electricity supply
distribution.
transfers from NGC to the local REC.
NETA: New Electricity Trading Arrangements – introduced in
GW: Gigawatt = 1,000MW.
March 2001 for wholesale power trading in England and Wales,
HARDENING: A price which is gradually stabilising or a slowly replacing the Electricity Pool which was established in 1990
advancing market. following the privatisation of the electricity industry. Has now been
replaced by BETTA.
HIGH DISTRIBUTION ASSISTANCE SCHEME: Assistance
towards high cost of distributing electricity in Northern Scotland. It OUTAGE: Period during which a generation plant is temporarily
is passed onto all suppliers under BETTA. They pass the cost on to shut down, e.g. for maintenance, inspection, testing or refuelling.
the consumer in the form of a unit charge. Charge is the published Scheduled outages are referred to as planned and unscheduled as
payments (£41,950,000) divided by the forecast demand for the unplanned.
year. Now officially called AAHDC.
OUTTURN: The final price for that period of consumption that has
HV: High Voltage – supply voltage above 1000 volts (1kV). just passed.
I&C: Industrial and Commercial – industry sectors. PES: Public Electricity Supply Company.
INTERCONNECTOR: Gas pipeline linking the UK and the POWER FACTOR: The proportion of total energy supplied to
Continent, from Bacton to Zeebrugge. a site which is actually converted into useful energy output, as
opposed to the wasted reactive power.
kVA: Kilovolt-Ampere – a unit of electricity incorporating the
reactive power component. PROMPT: The ‘prompt market’ is defined as any period up until the
end of the present calendar month.
kW: A unit of power, equivalent to 1000W or 1000 J/s.
REACTIVE POWER CHARGE (kVArh): Charge for reactive
kWh: A unit of energy, the amount of power used in an hour.
energy if the average power factor falls below a preset level,
(Energy (kWh) = Power (kW) x Time (h))
normally 0.9.
LEVY EXEMPTION CERTIFICATE (LEC): Exemption to the
REC: Regional Electricity Company – area distribution company.
payment of Climate Change Levy (CCL) on the electricity to which
See map at the end of this section.
the LEC relates. LECs are issued for electricity generated from
renewable sources, good quality CHP and coal mine methane.
10 Copyright © EQJHA Limited trading as EnergyQuote JHA: Seven Year UK Energy Price Forecast is published quarterly by EnergyQuote JHAAppendix – continued
glossary of terms – continued
RENEWABLE ENERGY: Generation of electricity from infinite TRANSMISSION LOSSES: Charges relating to electrical losses
resources, e.g. wind power or hydro-electricity. which occur as power is transmitted via the National Grid.
RENEWABLES OBLIGATION (RO): An obligation on electricity TRIAD: The three half-hourly periods in the year with peak
suppliers to source a specified percentage of the total electricity electricity consumption, with each period at least 10 days apart,
supplied to their customers in Great Britain is from eligible used to calculate the Transmission Charge for the NGC system.
renewable sources evidenced by Renewable Obligation Certificates
TRIGENERATION: Further development of the technologies
(ROCs) or instead pay the buy-out price.
used in CHP has led to trigeneration, i.e. generation of electricity
RENEWABLE OBLIGATION CERTIFICATES (ROC): and usable heat and/or cooling from the same quantity of fuel in a
Tradable certificates issued to generators for each whole megawatt- single operation.
hour of electricity generated from eligible renewable sources. ROCs
TUoS: Transmission Use of Systems – charges levied by the NGC
can be converted into emissions allowances in the UK Greenhouse
for the transmission of electricity through the National Grid.
Gas Emissions Trading Scheme (UKETS).
TW: Terawatt = 1,000GW.
ROUGH STORAGE: The UK’s largest gas storage facility just
offshore that enters the NTS via the Easington terminal in East UK ETS: UK Greenhouse Gas Emissions Trading Scheme – UK’s
Yorkshire. voluntary emissions trading scheme for greenhouse gases, which
started in April 2002.
RPI: Retail Price Index.
VOLATILITY: Measurement of the change in price over a given
SEASONAL TIME OF DAY (STOD): STOD contracts are based
period.
on price variation and unit prices may vary by month and individual
time period. In additions different rates will apply at weekends, Bank
Holidays etc. Rates specified in STOD contract have the highest
applicable to winter weekday peak hour consumption, lower rates at
weekends and the lowest rates at night.
SECOND TIER SUPPLY: Electricity supply from any other
supplier other than local Distribution Company (host REC).
SETTLEMENT CHARGE: A flat fee to cover the collection of
second tier data by the data collector (DC)
SETTLEMENT PERIOD: A half-hour period ending on the hour
or half-hour.
SOFTEN: A market price that is slowly declining.
SPOT MARKET: Market in which goods or services are traded for
immediate delivery at the prevailing price, i.e. the spot price.
STANDING CHARGE: A charge designed to average over and
recover from all customers on each tariff the elements of cost which
are independent of usage, these include the costs associated with
metering, billing and customer services.
SYSTEM BUY PRICE (SBP): The price paid in the Balancing
Mechanism by a party that requires more energy to meet its
contractual commitments.
SYSTEM SELL PRICE (SSP): The price paid in the Balancing
Mechanism by a party that has produced more electricity than it had
customers to buy
TARIFF: Published standard charges applied to gas and electricity
supplies that are not on a negotiated contract.
THIRD PARTY ACCESS (TPA): Right of any gas or electricity
supplier to have access to the national transmission system of
that energy, even though the system is operated and/or owned by
another organisation.
11 Copyright © EQJHA Limited trading as EnergyQuote JHA: Seven Year UK Energy Price Forecast is published quarterly by EnergyQuote JHAAbout EnergyQuote JHA
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UK Weekly Energy WEEK 15: 12 APRIL 2010
Conditions. All data is based on the previous
Price Brieng
working day’s closing prices.
SUMMARY
SUMMARY
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A Unique Perspective
European Weekly Energy WEEK 15: 12 APRIL 2010
3ULFH%ULHÀQJ
Issue 144
A Unique Perspective
UK Energy Focus 07 APRIL 2010
Issue: 336 GLOBAL MARKET NEEDS A
GLOBAL PLATFORM
…like the more embryonic climate
market, the global energy market
needs to heal the divides between
the rich and poor if all parties are to
prosper.
A Unique Perspective
European Energy Buyer 14 APRIL 2010
Issue 152 ITALY SEEKS TO BREAK THE
OIL PRICE LINK
After failing to break Eni’s domestic
market hold in 2004, the Italian
regulator is trying again. This time it
has a better chance of succeeding.
A Unique Perspective
12 Copyright © EQJHA Limited trading as EnergyQuote JHA: Seven Year UK Energy Price Forecast is published quarterly by EnergyQuote JHAYou can also read
