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Power Market Update – 6th March 2020

March 6 2020

Exciting news for the whole renewables industry this week as BEIS released a consultation document announcing proposed changes to the Contracts for Difference scheme.

There are changes to storage and negative pricing, but the main headline is established ‘Pot 1’ technologies (onshore wind and solar) are allowed to compete in future allocation rounds. Offering support for onshore wind, the UKs cheapest source of clean energy, is a huge step in the right direction to revitalising the largely stalled development industry.

The coronavirus outbreak has now spread to 72 countries outside of China. The effects can be felt throughout the commodities markets with oil demand set to contract in 2020 for the first time since the 2008 financial crisis. OPEC met in Vienna on Thursday to address the global imbalance in the supply and demand of oil. Their proposal is to curb oil output by 1.5% (1.5 million barrels per day) to deal with the reduced demand.

More volatility in the power markets this week. Wholesale power was up coming into the week due to a weakened pound versus the euro, and continued to rise with W20 seeing the biggest gains, levelling off towards the end of the week with the continued falling demand.

Meanwhile, system pricing spiked to a staggering £2,242/MWh in the middle of the week as wind generation fell off in the evening peak, before returning to normal levels shortly after.

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