U.K. power for next-day delivery rose to its highest level in almost two years as E.ON AG and RWE AG started oil-fed units while natural gas and carbon emissions permits gained, making electricity generation more costly.
Baseload power for tomorrow climbed as much as 14 pounds, or 23 percent, to 76 pounds ($119) a megawatt-hour, from 62 pounds on Dec. 3 for delivery today, according to broker data compiled by Bloomberg. That’s its highest level since Jan. 7. Baseload is delivered around the clock. The contract was at 75 pounds as of 4:30 p.m. in London.
Electricity demand may be the highest so far for this year, Graham McQuarrie, a National Grid Plc spokesman, said by telephone. National Grid forecast maximum power consumption of 59,499 megawatts at 5 p.m.
E.ON started a unit at its oil-fed power station at Grain, southeast England, while National Grid asked RWE AG to switch on units at its oil plants at Fawley and Littlebrook. National Grid paid RWE as much as 565 pounds a megawatt-hour for generation from Littlebrook unit 1.
Britain has the three oil-fired stations which usually run as back-up generation when demand is high. Oil plants are more costly to run. About 80 percent of Britain’s electricity comes from coal and natural-gas fired power stations and some utilities can switch between the fuels depending on prices. Higher gas costs can encourage generators to switch to coal, which requires about twice as many emissions permits as gas.
Natural gas for delivery today rose as much as 2.75 pence, or 4.5 percent, to 64 pence a therm. The contract was at 61.4 pence as of 4:30 p.m. London time. The fuel is also used to heat about 80 percent of the U.K.’s homes and businesses.
National Grid Plc forecast gas use may increase to 442 million cubic meters in the 24 hours through 6 a.m. tomorrow, about 90 million more than normal for this time of year, data on its website show. The nation’s pipes will hold 360 million cubic meters at that time, 9 million more than at the start of today.
Emissions permits for delivery this month advanced 10 cents, or 0.7 percent, to 14.85 euros a metric ton on London’s Ice Futures Europe.
Freezing weather and snow across Britain are boosting demand for energy. Temperatures are forecast to return to normal for this time of year by the end of this week, Jim Dale, senior risk meteorologist at British Weather Services in High Wycombe, England, said by e-mail. December may be the coldest in more than thirty years, according to Dale.
“We are expecting a return to Arctic weather including blizzards and deep frosts from around Dec. 17,” he said.
The colder-than-normal weather in the U.K. has pushed demand for gas to near-record levels and depleted underground storage stocks. Britain, increasingly reliant on fuel imports as North Sea reserves decline, is able to store the least amount of gas of any major European country, despite being the continent’s largest consumer of the fuel.
The first-quarter gas contract was little changed at 59.05 pence a therm after earlier gaining as much as 2.25 pence, or 3.8 percent, to 61.5 pence. That’s the highest price in more than a year. Inventories at Rough, the U.K.’s largest storage site, are at their lowest level in eight years, grid data show.
U.K. power for January rose 50 pence to 53 pounds a megawatt-hour, according to Bloomberg data compiled with prices from brokers including ICAP Plc, GFI Group Inc. and Spectron Group Ltd. That’s the highest level in almost two years.