Winter Outlook 2009/10. 8 th October 2009 Peter Parsons

Transcription

1 Winter Outlook 29/1 8 th October 29 Peter Parsons

2 Agenda Winters 28/9 & 29/1 Gas Demand Gas Supply Electricity Demand Electricity Supply

3 28/9 Overview Winter 28/9 characterised by: Periods of cold weather, snow and ice for ~ 2 weeks. Overall winter was average January cold snap drove UK gas demand to near record levels not seen since 23 (446mcm) Widespread gas supply disruptions across Europe in January as a consequence of Russia/Ukraine dispute over gas prices and compressor fuel Unprecedented IUK winter export flows Higher demands met through significant flows from UK Storage facilities at an early stage of the winter period Concerns raised over the UK s resilience to a late winter supply shock or prolonged period of cold weather Lower demands due to economic recession

4 Average winter temps 1928/9 to 28/9 9 Oct to Mar average temps ( o C) / / / / / / / / / / / / / / / / / /1997 2/21 24/25 28/29 212/ /217 Winter 1 year winter average 17-year SNT Forecast climate

5 National Composite Weather Variable (CWV) and 17 year Seasonal Normal CW (Oct 28 Mar 29) degrees CWV SNCW 2 1-Oct-8 1-Nov-8 1-Dec-8 1-Jan-9 1-Feb-9 1-Mar-9

6 Mean National CWV: October March Degrees CWV Year 28/9 Last 1 Other years

7 Russia Ukraine: Why is it important? Crisis/State of Emergency Demand Response Moderately effected No Effects Reported Ukraine 12 bcm Russian Gas transits through Ukraine, ~2% European supplies Jan 29 Payment dispute leads to 13 day cut off 8 countries severely effected (55 million people), many households without heating Western Europe less severely impacted but increased storage use & exports Ukraine has been heavily impacted by the global recession and credit crunch Continued fears over payments leading to future cut offs

8 NBP vs Continental Contract Price Price (p/th) Oct-8 Nov-8 Dec-8 Jan-9 Feb-9 Mar-9 Apr-9 May-9 Jun-9 Jul-9 Aug-9 Sep-9 NBP Contr Price

9 28/9 Supplies 55 No material increase in UK gas price despite a combination of high demands, 8 Russia / Ukraine and subsequent exports via IUK mcm/d p/therm /1/28 1/11/28 1/12/28 1/1/29 1/2/29 1/3/29 UKCS Norway BBL IUK LNG Storage NBP

10 Remaining Storage Delivery mcm/d SRS MRS LRS 2 nd February 29 1 st October Days Stock

11 IUK flows v differential between NBP & European contracted price 3 3 IUK imports 2 1 Dispute over, high UK demand, continental imports Big responses, little variation in price differentials 2 1 IUK exports mcm/d Russia/Ukraine dispute with UK exports to continent Response to high UK price p/therm NBP < European contracted price 1/1/28 1/11/28 1/12/28 1/1/29 1/2/29 IUK Imports IUK Exports Differential Note: European contracted price based on National Grid analysis

12 28/9 Demands (inc IUK) 5 45 DM (ex IUK) NDM IUK mcm Oct 8-Oct 15-Oct 22-Oct 29-Oct 5-Nov 12-Nov 19-Nov 26-Nov 3-Dec 1-Dec 17-Dec 24-Dec 31-Dec 7-Jan 14-Jan 21-Jan 28-Jan 4-Feb 11-Feb 18-Feb 25-Feb 4-Mar 11-Mar 18-Mar 25-Mar 1-Apr 8-Apr 15-Apr 22-Apr 29-Apr

13 Winter 28/9 gas demand On a weather corrected basis all market sectors were lower than last year NDM actual demand was slightly higher than last year due to the colder weather, but lower when weather corrected NTS industrial demand reduction based on temporary reduction at 2 large sites, these have returned to operation recently Domestic NDM (includes domestic) DM excluding power NTS Industrials Ireland Power GB % of actual winter demand 46% 6% 9% 1% 6% 23% 1% Weather corrected change from 27/8-5.3% -5.8% -11.9% -34.7% -.5% -4.1% -6.%

14 28/9 Weather corrected weekly peak electricity demands /8 Weather Corrected Winter Peak /7 Weather Corrected Winter Peak Demand (GW) /9 Weather Corrected Winter Peak ~6% reduction 46 November December January February March 28/9_NORM 27/8_NORM 26/7_NORM

15 28/9 Generation Mix GWh/d Gas min 274 GWh/d (~5 mcm/d) max 451 (~83) avg 371 (~68) 1/1/28 1/11/28 1/12/28 1/1/29 1/2/29 1/3/29 NUCLEAR GAS RENEWABLES FRENCH I/C OCGT OIL COAL

16 29/1 Winter Outlook Mum. He showed all of these charts last year! I know dear, he needs some new material

17 Met Office Sept 9 Early indications for winter 29/1 Rainfall: Signals slightly favour near or above average rainfall over much of Northern Europe, including the UK Temperature: Preliminary indications of near or above average temperatures over much of Europe including the UK Winter 29/1 likely to be milder than last year for the UK, with a 1 in 7 chance of a cold winter Weather series: Main forecast for Winter 29/1 will be issued in November by Met office

18 Total UK Winter Demand 6 55 Average ~ 3mcm/d 5 bcm Further 2.5% lower Seasonal normal forecast 28/9 Actual 28/9 Weather corrected actual 28/9 Seasonal normal forecast 29/1

19 Marginal dark / spark spreads in winter 6 FUTURES 5 4 /MWh Oct-8 Apr-9 Oct-9 Apr-1 Oct-1 Apr-11 Dark Spread Spark Spread

20 Coal / gas generation winter 29/1 Gas (p/th) Prices as of 3/9/9 55% Coal Burn Dec Nov Oct Jan-Mar Coal / Gas Burn 1 4% CCGT Gas Burn Coal ($/tonne) Gas Range 4% - 55% Gas Favoured Uncertain Coal Favoured

21 29/1 forecast power generation mcm/d 88 mcm/d 15.9 bcm mcm/d mcm/d Forecast 28/9 Actual 28/9 Forecast 29/1 Actual Low Seasonal normal High

22 Possible variation in daily gas demand mcm/d = = Weather Power Generation Net Cause of Demand Variation NDM cold DM cold NDM warm DM warm Gas marginal generation Gas baseload generation Net increase Net decrease

23 Winter 28/9 4 Flexible supplies notably storage & IUK 3 mcm/d 2 Non Storage Supplies (NSS) UKCS & other imports 1 1/1/28 1/11/28 1/12/28 1/1/29 1/2/29 1/3/29 UKCS Norway BBL IUK LNG Storage

24 Storage Comparable storage levels to last winter (4.6 bcm, 124 mcm/d) Aldbrough offsets loss of some LNG storage Lower demands may influence storage use as may forward prices Storage (mcm/d) bcm 95 mcm/d 1/1/28 1/11/28 1/12/28 1/1/29 1/2/29 1/3/29 Storage Demand Demand (mcm/d) 34 mcm/d is typical level of non storage supplies

25 Historic & forecast supplies (highest 2 demand days) (mcm/d) 25/6 26/7 27/8 28/9 29/1 UKCS Norway BBL LNG Total NSS [1] (ex IUK) IUK Total NSS Storage Supply = Demand [1] NSS = Non Storage Supply

26 Supply make-up, top 2 days 5 4 mcm/d /6 6/7 7/8 8/9 9/1 Forecast IUK UKCS Norway BBL LNG Storage

27 LNG import flows 35 mcm/d (average over month) Oct-8 Nov-8 Dec-8 Jan-9 Feb-9 Mar-9 Apr-9 May-9 Jun-9 Jul-9 Aug-9 Grain South Hook Dragon

28 Drivers that may influence supply & demand in 29/1 Repeat of Russia / Ukraine or other Continental / global driver IUK exports?, lower Norway?, lower LNG Lower Continental and global demand increases UK supply Change in gas prices

29 Forward Prices (September) 8 6 p/th 4 2 Note alignment of all prices & no seasonality in winter prices Oct-9 Nov-9 Dec-9 Jan-1 Feb-1 Mar-1 Apr-1 May-1 Jun-1 Jul-1 Aug-1 Sep-1 HH Zee TTF NBP German - Contract

30 Drivers that may influence supply & demand in 29/1 Repeat of Russia / Ukraine or other Continental / global driver IUK exports?, lower Norway?, lower LNG Lower Continental and global demand increases UK supply Change in gas prices Current winter UK price is below Continental contract More Norwegian?, IUK exports? UK & US prices are closely aligned Limited incentives for LNG to cross Atlantic for trades Future UK summer prices = winter prices Less of an incentive to flow storage? Higher NSS? Higher demand due to lower wholesale prices, notably for power generation Weather & events!!

31 Information Provision

32 29/1 generation availability assumptions Assumed availability 9% GW % Full Metered Capacity (GW) 8% 8.4 Assumed Availability (GW) Nuclear French Interconnector Hydro generation Wind generation Coal Oil Pumped storage OCGT CCGT

33 Normal demand and assumed generation availability GW /1/9 2/11/9 9/11/9 16/11/9 23/11/9 3/11/9 7/12/9 14/12/9 21/12/9 28/12/9 4/1/1 11/1/1 18/1/1 25/1/1 1/2/1 8/2/1 15/2/1 22/2/1 1/3/1 8/3/1 15/3/1 22/3/1 Normal Demand 86% generation with 2GW French Imports Short term operating reserve

34 Gas power interaction, 1in 2 weekday 7 6 OCGT Gas Marginal 5 Pumped Storage GW Optimised gas ~5 mcm/d, excluding distillate ~6 mcm/d Gas at base load ~1 mcm/d Distillate Oil Gas Non-NTS Gas Baseload French Interconnector Coal Wind Hydro Nuclear Settlement Period

35 1 in 2 demand and assumed generation availability 7 65 GW /1/9 2/11/9 9/11/9 16/11/9 23/11/9 3/11/9 7/12/9 14/12/9 21/12/9 28/12/9 4/1/1 1 in 2 Demand Short term operating reserve 86% generation with 2GW French Imports 11/1/1 18/1/1 25/1/1 1/2/1 8/2/1 15/2/1 22/2/1 1/3/1 8/3/1 15/3/1 22/3/1

36 Summary Winter 29/1 likely to be milder than last year for the UK, with a 1 in 7 chance of a cold winter Forecast gas demand (weather corrected) 2.5% lower, on top of 6% reduction last winter Forecast non storage supply similar to last winter with more upside, notably through LNG Generation availability exceeds forecast peak. Capacity margin 34%, operational margin 15% Economics of coal vs gas for base load generation are marginal but coal expected to be used at higher demand (prices) Gas for CCGTs continues to provide flex for electricity market and potentially a market response for gas Events happen!