UK day-ahead power prices break records, climbing as high as GBP 2500/MWh

The price of electricity on the UK day-ahead market reached a record high for the second consecutive day. During Tuesday, 1 MWh of electricity for delivery on Wednesday between 19:00 and 20:00 traded at GBP 2500 on Nord Pool's N2EX exchange.

Current high commodity prices, especially for coal and natural gas, are being reflected not only in forward contracts for the following month and year, but also in contracts for the following day. Price fluctuations are generally even more pronounced in these markets, as they are much more strongly influenced by factors such as current weather conditions.

This is precisely what happened on the UK day-ahead market during Monday and Tuesday, where electricity for delivery during the following day is traded. Low expected wind power generation pushed prices for the evening peak to a record high of as much as 1750 GBP/MWh as early as Monday. However, Monday's record lasted only until the following day.

During Tuesday, expected wind power generation fell further from 3.6 GW to just 2 GW. Renewables generally cover more than 20% of total electricity consumption in the country. At the time of the extremely high prices, however, the share of renewables was only around 8%.

⚡⚡CRAZY POWER PRICES⚡⚡ UK day-ahead electricity prices climb further, much further, setting a fresh and eye-watering all-time high of £424 per MWh on the N2EX platform (up ~20% from yesterday's already record high). UK power prices tomorrow at 7-8pm will reach £2,500 per MWh pic.twitter.com/maiQN72DTN

— Javier Blas (@JavierBlas) September 14, 2021

As a result, the share of natural gas in power generation stood above 50%. This was another reason why spot electricity prices recorded such a significant increase. As in continental Europe, the generation costs of gas-fired power plants in the UK are influenced by gas prices on the exchange. The price at the European TTF trading hub exceeded 65 EUR/MWh on Tuesday, while natural gas for delivery in October was trading at the same level on the UK's ICE exchange.