Energy Latest: UK Readies Coal Plants as Snow Tests Grid

(Bloomberg) -- The UK is readying coal-fired power plants as a contingency measure as sub-zero temperatures and low wind sent power prices surging to records.

An intense cold is gripping much of northwest Europe. With London blanketed in snow, the Met Office has yellow weather warnings for snow and ice in place throughout the UK until Thursday.

Nations are turning to coal to help ease reliance on natural gas for power generation. Germany has become so dependent on coal its electricity pollution profile was similar to that of India at times this month.

The cold snap is expected to last all week across northwest Europe at the same time as the wind is low — reducing power supplies.

Key Developments:

• Winter freeze grips Europe as homes turn up heating
• EDF says nuclear restarts give confidence about supply outlook
• The EU is still fighting over a cap on gas prices
• Gas prices fell

(All times London)

Power Prices Calmer Tomorrow (10:39 a.m.)

Power prices in the UK for tomorrow fell suggesting an easing in the supply-demand balance tomorrow, with the day-ahead contract dropping 32% to £387.55 per megawatt-hour.

The price for Tuesday’s teatime peak at 5 p.m.-6 p.m. fell to £518 per megawatt-hour on Epex, about a fifth of the price for the same period today.

UK Gas Use Surges as Record LNG Arrives (9:24 a.m.)

UK’s forecast natural gas demand for Monday reached the highest level since February 2021, according to National Grid Plc.

To meet increased heating and power needs, flows from UK’s three liquefied natural gas terminals are at a record-high for the time of the year. Inflows of gas from mainland Europe started last week via one of the the two interconnector pipelines, adding to supply.

No Supply Interruption, UK Grid Says (8:47 a.m.)

The electricity system operator is not expecting an interruption to supply today, its executive director said, despite freezing weather putting a strain on the grid.

“We have enough supplies secure through the rest of the day that we can manage that and ensure that there’s no disruption to customer supplies as we manage through this very, very cold weather,” Fintan Slye told BBC Radio 4.

Britain Leans on Gas to Generate Power (8:33 a.m.)

Great Britain was burning gas to produce more than half of its power on Monday morning as low wind shrunk the amount it could generate from renewables.

Gas accounted for 58% of power generation, with nuclear at 14% and imports at about 9%, according to the National Grid ESO. Wind, usually saves the UK from burning a lot of expensive and polluting gas, was meeting just 4% of demand on Monday.

Grid to Run Demand Reduction Test (8:30 a.m.)

National Grid Plc is running a test of its flexibility tool on Monday night. The test will mean a turn down of a maximum 300 megawatts of demand from households and businesses form 5 p.m.

Octopus Energy Ltd. is offering its customers kick backs for reducing consumption from this evening.

Freezing Outlook (7:49 a.m.)

Freezing conditions will remain across Northern Europe through the week, with snow and ice triggering yellow weather warnings in the UK. The unseasonably cold weather is expected to hit the Nordics the hardest, with temperatures of 12.5 degrees Celsius below normal in Oslo this Friday, forecaster Maxar Technologies Inc. said in a report.

The cold snap is expected to remain across Germany and the UK throughout the week, with London forecast to see temperatures 7.3 degrees below the seasonal average. Milder weather is expected to return to the region from Dec. 21, according to Maxar’s report.

Test of Gas Reserves (7:47 a.m.)

All eyes will be on the rate of drawdown of natural gas storage facilities, which until now, has been quite delayed. Cold weather could mean these reserves are depleted at a faster rate to heat buildings and fuel Europe’s power stations.

Intraday Power Prices Jump (7:45 a.m.)

Scarce power supply across western Europe is driving up prices, which are traded in short-term intervals as well as months and years ahead.

French power for 9 a.m.-10 a.m. is selling for as much as €995 per megawatt-hour on exchange Epex Spot SE, about 20 times higher than normal levels before the crisis. UK power for 5-6 p.m., the teatime peak of demand, sold in the day-ahead auction for almost £2,600, a record, on Sunday.

French Nuclear Poised to Increase Supply (7:35 a.m.)

After months of near-constant delays, the French nuclear fleet is holding firm at just the right time. Electricite de France SA didn’t extend any outages over the weekend, meaning two more reactors could be producing power by the end of the week.

Generation is at the highest level since March and further restarts could push French nuclear power toward levels typical for this time of year. It couldn’t come at a more crucial time.

Coal Stays Alive (7:29 a.m.)

The UK’s system operator is paying coal plants that were heading for closure almost £400 million to stay online this winter as a back-up, while the German government extended the life of coal plants to replace the steady generation of nuclear plants it has mostly phased out.

UK Readies Coal Plants (1 a.m.)

The UK asked two coal-fired power plants to get ready in case they are needed as sub-zero temperatures test the grid.

“This measure should give the public confidence in Monday’s energy supply,” National Grid said in a statement overnight.

Read: War Lowers Resistance to Renewables in Europe’s Biggest Polluter

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