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Wholesale Electricity Market Report continues to shine light on power trading

The second edition of Energy UK’s new Wholesale Market Report continues to shine a light on the trading of electricity in the market. The report sets out the electricity trading horizon at different dates, from the coming season to just a day ahead, so people can get a better picture of how average wholesale electricity prices are changing over time.

Key highlights from this report are:

  • In the last quarter of the winter season, trading increased with the total power traded being over 3 times demand.  In addition, there was significantly more liquidity in March than in January.
  • Given historic trends and the nature of company hedging strategies; there is a greater volume of trade for near term delivery than in the longer term but there remained some significant liquidity for the season ahead.
  • The price of electricity to be delivered over the tail end of the summer season and into the start of the winter season of 2014 drifted downwards.
  • Note: this report gives the position in the market immediately before the introduction of the market maker on 31 March as part of Ofgem’s new Secure and Promote Licence Conditions.  Market Making involves an obligation to post bids and offers in the wholesale electricity market during two daily windows and according to specific requirements.

Energy UK decided to produce the Wholesale Market Report to provide greater access to energy trading data and to make the energy market clearer and easier to understand. Prior to the creation of the Wholesale Market Report energy trading data was not generally available or easy to understand. This was because power is predominantly traded by brokers, immersed in what is happening, and others who must subscribe to data available only on broker screens.

This is the last report before the market maker provisions came into effect from 31 March under Ofgem’s Secure and Promote Licence Conditions.

The report, which is to be produced monthly, will always:

  • Show what is happening in the market in the short and long term;
  • Set out the wholesale price being paid for base load power; and
  • Illustrate the differences in how energy is being traded in the short and the long term.

Energy UK Chief Executive Angela Knight said:

“This second Wholesale Electricity Market Report continues to shine a light on electricity trading and the price at which it is being traded. It shows the way prices vary from one maturity date to another and it is not surprising that, as the need to buy gets more urgent, the day ahead market shows much more volatility than the picture a season out.

“Increasing transparency allows third parties who are not market participants to see just how much liquidity there is in the market and how electricity is traded.”

View the Wholesale Market Report.



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