Wholesale prices dropping

Cornishfancies

Can anyone explain why electricity prices are going up when electricity wholesale prices have dropped from £450 per MWh in August to just £52 per MWh today, which is below the price one year ago. What is going on?

EssexHebridean

Google "hedging in the energy markets" and you should find some explanations. 

[Deleted User]

Which wholesale price are you looking at?  Have you just been told one random low number and that's what you're basing this from?  Was it a twitter post by any chance?

Just in the last week, on one of the many markets that trade power, I see prices ranging from £28 to £172 per MWh

Cornishfancies

Deleted_User said:

Which wholesale price are you looking at?  Have you just been told one random low number and that's what you're basing this from?  Was it a twitter post by any chance?

Just in the last week, on one of the many markets that trade power, I see prices ranging from £28 to £172 per MWh

I was using the site National Grid Live (iamkate) which gives information on electricity production and also data on wholesale prices. I thought this was a reputable site. I will research where they get their data.

[Deleted User]

From the graph on the iamkate site - it looks like they are using System Buy/Sell prices to represent wholesale price.  Which is very odd, because that isn't actually a wholesale price at all, it's a balancing price.  Very poor labelling there.

Even on that chart - the price changes between 25p/MWh and £230/MWh so still not a good argument for tariffs being wrong. 

They are getting their data from https://www.bmreports.com/bmrs/?q=eds/main - the best source for balancing and operational data but nothing to do with the wholesale market.

Cornishfancies

Cornishfancies said:

Deleted_User said:

Which wholesale price are you looking at?  Have you just been told one random low number and that's what you're basing this from?  Was it a twitter post by any chance?

Just in the last week, on one of the many markets that trade power, I see prices ranging from £28 to £172 per MWh

I was using the site National Grid Live (iamkate) which gives information on electricity production and also data on wholesale prices. I thought this was a reputable site. I will research where they get their data.

Okay, I have found out they the data comes from Elexon, and in particular, the Balancing Mechanism Reporting Service. This sound legit to me. 

[Deleted User]

Cornishfancies said:

Cornishfancies said:

Deleted_User said:

Which wholesale price are you looking at?  Have you just been told one random low number and that's what you're basing this from?  Was it a twitter post by any chance?

Just in the last week, on one of the many markets that trade power, I see prices ranging from £28 to £172 per MWh

I was using the site National Grid Live (iamkate) which gives information on electricity production and also data on wholesale prices. I thought this was a reputable site. I will research where they get their data.

Okay, I have found out they the data comes from Elexon, and in particular, the Balancing Mechanism Reporting Service. This sound legit to me. 

That's the key - the balancing mechanism - not the wholesale markets.  They are completely different things.  No supplier can participate in the balancing mechanism - it's the arrangement by which National Grid (the ESO) deals with generators to balance the system.

It might "sound legit" but it isn't relevant.

Cornishfancies

EssexHebridean said:

Google "hedging in the energy markets" and you should find some explanations. 

Thank you. Hedging is not something I fully understand but I will try.

[Deleted User]

One thing to remember is that there is no "wholesale price".  Someone would want a different price for electricity (or gas) delivered tomorrow compared to delivered next month, or on a contract where you agreed to take it every day for a year compared to if you only wanted it once.

Most wholesale market contracts are long-term future contracts, completed directly between participants, and are not public.

There are two places where short-term market data is available (because it is auctioned and the results of each auction are published) - for power delivered "tomorrow" and hence called "day-ahead" trading.  This is either for a 30-minute or a 60-minute block on the next calendar day (both are different markets).  It represents only a small portion of the total traded energy.

https://www.nordpoolgroup.com/en/Market-data1/GB/Auction-prices/UK/Hourly/?view=table

https://www.epexspot.com/en/market-data?market_area=GB&trading_date=2022-10-25&delivery_date=2022-10-26&underlying_year=&modality=Auction&sub_modality=DayAhead&technology=&product=30&data_mode=graph&period=&production_period=

Remember, even these are not "the wholesale price", they are just the prices that have been paid for electricity for delivery at one specific time bought on one specific market.

You can see how little these prices matter if you look at how much is bought and sold on those markets.  For 3-4pm today, for example, the epexspot 60 minute market traded a total of 4600 MWh (4.6 GWh).  The total electricity demand in that hour was about 33000 MWh (33 GWh).

[Deleted User]

Low gas prices are benefitting consumers on Octopus’ Tracker Gas tariff. My daily price is 2.77p/kWh. Correct me if I am wrong, but reports suggest that this is down to low demand; good gas availability and full storage tanks. Clearly, if Europe gets a cold snap next week, this situation could change overnight.

Alnat1

Low gas prices also mean the Octopus Agile and Tracker electricity prices are cheap for now too. My Agile rates for today show only the 4-7pm peak slots are at the capped 33.03p/kWh rate, the remaining 21 hours vary between 11p and 22p, with more at the lower amounts. My Tracher gas is 2.71p/kWh today.

Once winter really sets in, prices will rise but this mild spell is very good for those of us on TOU tariffs.