markets – Global Energy Advisory https://globalenergyadvisory.com Value creation through strategy, analysis, and trading Wed, 08 Sep 2021 15:40:28 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.2 https://i0.wp.com/globalenergyadvisory.com/wp-content/uploads/2021/06/GEA-globe.png?fit=32%2C32&ssl=1 markets – Global Energy Advisory https://globalenergyadvisory.com 32 32 195783565 Balancing Market spikes and solutions https://globalenergyadvisory.com/2021/09/08/balancing-market-spikes-and-solutions/ Wed, 08 Sep 2021 15:01:47 +0000 https://globalenergyadvisory.com/?p=626

Last night the UK balancing price hit £3404/MWh, because of tight gas and interconnected electrical supplies coupled with low levels of both nuclear and renewable generation. While dramatic and demanding to trade: these price levels will have repercussions around the wider industry. Remember, we have had base load day ahead prices trading well over £100/MWh for weeks now which will push most suppliers into large losses because at best they only make a 2% gross margin (which this level of wholesale prices never mind balancing market exposure will, at the very least, have wiped out their margin 15 times and over).

Also, all the traders will have to find cash to margin against their traded positions as they will be affected by either the MTM margin calls, or as physical players by the Elexon credit price cap which increases to £113/MWh today. I can sympathise with the industry because it is not easy for any business to “magic up” hundreds of millions of cash for credit cover: but to stay in business most power firms will need to become super intelligent about how they manage their trading collateral but in reality, some players can’t manage it at all. The credit risk in the power industry has always been high: CENTRE is a solution. Talk to us.

Balancing Market Spike
Imbalance prices for 7 Sept 2021
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