This week, the UK Government rejected the proposed Swansea Bay tidal lagoon after almost 4 years of backing. It is said that the end cost on tax payers would be too high.
Oil prices have driven UK and European energy markets on an upward trend over the last month, as Brent Crude reached 4 year highs and breaching the $80/bbl mark. Geopolitical tension this year has saturated all commodity markets. The US and North Korea headlining, following by issues with the US-China trade deal. Meanwhile, OPEC members are producing low levels of oil, and have essentially re-balanced the market, causing a complete shift from an over-supplied market to once where supply is a concern.
The UK went 55 hours without coal fired power last week, as a result of strong renewable generation, mainly in the forms of solar and wind. Additionally, the UK experienced low demand for both gas and power while the ‘mini-heat wave’ saw temperatures increase to almost 28 degrees. There has been a huge shift over towards renewable generation, and a sharp drop in coal fired power being generated in the UK.
The UK saw another renewable energy record made last week when the ‘Mini Beast form the East’ swept across the country. Over 14GW of power was generated from Wind alone, supplying over 35% of UK power. This was a huge milestone for UK power generation, after the last few winter months saw gas and coal fired power make up the majority of the power generation stack.
Brent Crude oil prices have seen some large fluctuations since the beginning of 2018, breaching $70/bbl in January, to then drop back down to $62/bbl. Geopolitical tension between the US and North Korea, OPEC production caps, and increased US shale production, are all major factors to influence and shape the current price of oil.
Eggborough, one of the UK’s largest coal power stations, is set to close before the end of the year as it’s become less and less economical to generate power. The power station is capable of generating power from biomass as well as coal, however after failing to obtain a Capacity Market contract in the last round of auctions. Many of the UK’s gas and coal fired power plants rely heavily on winning Capacity Market contracts in order to remain profitable, however Eggborough have missed out this time round, causing its imminent closure.
Oil markets have started the year on a volatile manner, as the first three weeks of the year has seen Brent Crude prices increase from $64/bbl to over $70/bbl. At the time of writing, Brent has eased off from 3 years highs to $68.88/bbl. To put into perspective, Brent Crude is trading 24% higher than in January 2017.
Liquefied Natural Gas is something we relate to Qatar, as the worlds’ largest exporter of the commodity in is coolest, liquid form. However, Russia are gaining some ground in this competitive market, by attempting to transfer LNG from the Arctic Yamal Peninsula to the rest of the world, including Asian markets where LNG is heavily relied upon.
Norway’s largest gas field lies on the Norwegian Continental Shelf in the North Sea. The Troll gas field has the ability to produce enough gas to supply almost 40% of the UK’s annual gas demand. The UK is the largest importer of Norwegian gas, closely followed by Germany and France. While the UK gas market is adapting to the loss of Rough – the UK largest offshore gas storage facility – the Troll gas field is anticipated to make up for some of that loss.
The Crown Price of Saudi Arabia Mohammed bin Salman, is currently leading an anti-corruption case on an unprecedented scale. His main targets are seemingly some of Saudi Arabia’s most wealthy and most influential. Arrests have included 11 princes, 4 ministers and dozens of influential business men and ex-ministers.
This winter will be the first winter that promises the delivery of power through the Capacity Market (CM) scheme. The scheme which currently sits under the Electricity Market Reform (EMR) aims to increase UK power generation and capacity during peak hours and periods of system stress. Initially the CM scheme was to be introduced in October 2018, however due to tight supply over last winter (winter 16/17), the Government brought the delivery date forward by 1 year.
The first gas has been extracted from new gas fields, located just off the coast of the Shetland Islands. The two fields, named Edradour and Glenlivet are estimated to provide around 1.9 million barrels of oil and gas equivalent in 2018. This comes at a time when gas supply in the UK is below normal as the largest offshore storage site Rough is closed, leaving only cushion gas to be withdrawn over the next few years.