UK Power - Marex Spectron

UK Power

August 8, 2018

The Research Team reviews the UK Power Market

 

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8 August 2018

  • Total power production is predicted to decrease into week 33 (between 0 and 1000 GWh/week drop). Wind power is expected to significantly decline. The associated output should peak around the weekend, but gradually decrease throughout week 33. The electricity flow from France to the UK continues to remain abnormally high, up to 1.5 standard deviation from the norm.
  • Low pressure will affect the UK during the second half of this week. High pressure is expected to overtake into week 33 (and possibly continue into week 34), leading to a new increase in surface temperatures. The decrease in wind power (see also the short-term supply) will likely increase the capacity utilization of the fossil fuels (mainly gas), which is interpreted as a positive price development.
  • The macroeconomic conditions reflect a rather gloomy scenario. While the recent figures for European PMI are more optimistic (July data), the UK still ranges between 54 and 55. The latest data on industrial production also suggests a month-on-month deceleration. On the other hand, the business expectation index is associated with an upward trend for the third month in a row.

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