Gas Surges in UK mid-August Power Mix (Update)

(Adds gas market comment from Marex Spectron, para 4)

The UK government has made much of Britain's switch to renewable energy and the corresponding reduction in fossil fuels, especially coal. This is helping the UK to meet its goal of lower carbon dioxide emissions, although the figures do include imports of electricity from the continent, and some of that comes from coal or gas-fired plant.

But while the winter saw a very large amount of on and offshore wind – according to market regulator gas accounted for just 27% of the total in the first quarter while wind and solar accounted for about 40% – windless days in summer mean gas is essential.

Gas has accounted for over half of the mix for some of the time, absorbing the reductions in renewable output as needed, implying wide fluctuations as power cannot be stored economically. As of press time (1.15 local time on a windy if not stormy day) the UK power mix was led by renewables: wind accounted for 41% of the total demand of 29,4 GW. Gas was second at 20.7%, and solar was third, with 16%.

This rise in wind is expected to impact gas for a while longer, according to Marex Spectron, which said August 21 that a high-pressure system was expected across the continent in the last week of August with a low-pressure system found across the northern regions. Between these two lies the jet stream driving wind energy production over northern France and Germany. 

The wholesale markets manager at UK energy consultancy Cornwall Insight, James Brabben, told NGW August 21: "Gas, mainly from combined-cycle gas turbines (CCGTs), continues to provide a significant share of the generation mix, with the most efficient assets running at baseload for much of the time. Although renewables and nuclear are significantly cheaper when running, gas is the next technology that typically runs in the market and helps to meet demand on the system.

"In fact, last week (August 10-16) CCGT generation accounted for 55.9% of all generation. This was predominately down to an increase in demand and  a shortfall in wind generation.

"The flexibility of gas means that it is typically the marginal fuel, setting electricity prices and has the ability to respond more easily to changes in supply and demand. Gas is significantly cheaper to operate than coal, owing to underlying commodity prices and the very high carbon prices added to coal generators. 

"While the UK market has increasingly become a ‘renewables + nuclear and gas’ driven market, Covid-19 has shown how higher renewables generation can significantly impact on gas running hours and operations. In the years to come, this is likely to impact large gas plant operating models with the potential for reduced running hours as the share of renewables on the system increases."