NSR Market Update:  Green Gas down 2.8% and PPA and underlying baseload power down 2.5%

• PPA and Green Gas markets stabilised this morning (8/10/24) and traded flat to yesterday’s closes in early market activity.
• The UK NESO (National Energy System Operator) has published its annual “Winter Outlook”. Summary key points from our perspective:
• The winter generation margin is at its highest since 2019, marking a significant improvement.
• The buffer of “spare capacity” has now widened to 8.8%.
• Interconnector flows of imported European power are a crucial driver of this surplus, and are expected to increase even further in the coming months.
• Imports are up 8% year on year.
• Viking Link (1.4GW), commissioned in April, will ramp up capacity, delivering a 30% year-on-year increase.
• The NESO also comments on “permanent demand destruction”, which the NSR had discussed previously.

NSR Market Update:  PPA pricing down 3.25%  & Green Gas down 4%

• NBP gas contracts moved to a premium over European TTF benchmarks.
• We usually expect the NBP to trade at a discount through much of October.
• The move to a positive spread suggests increased relative UK demand over Europe.
• Unlike European-traded gas markers, the UK lacks “seasonal swing storage” (after the closure of the Rough facility in 2017).
• On the PPA side, weak carbon and wind performance continued to depress underlying power markets.
• German Wind will reach nearly 43GW in the coming days.

10/10/24  NSR Market Update: NBP gas is up 2.5% & PPA pricing is up 1.5%