A new playbook for the GB wholesale markets

With the effects of COVID-19 permeating all parts of the energy value chain, in this week’s Energy Perspective our Wholesale Manager, James Brabben, takes a look at how it is impacting wholesale pricing and the electricity generation fleet, both now and, potentially, in the long term.

Order of play

We at Cornwall Insight have been closely tracking the impact of COVID-19 so far on the market, with many of the effects seeming to come from the classic economic playbook. A demand shock occurs, leading to vast oversupply of commodities and goods, followed by a sharp fall in those goods value both in the near term and potentially longer term. Existing assets have their values re-adjusted and new investors re-assess their business models again. It is a story played out over previous crashes, bubbles and depressions.

What is more unique this time is the uncertainty around the potential length of the impact of COVID-19 – how and when a recovery occurs and if that recovery brings the economy and the energy markets, back up to “pre-impact” levels. This is especially true for energy markets in remaining as unscathed as possible on the road to net zero.

We have been analysing all of these permutations recently to assess the potential outcomes and consequences for the energy markets, something we distilled into a webinar on 9 April. Our analysis so far highlights the magnitude of the changes and suggests a potential new reality, at least over the course of 2020, for the GB wholesale market in terms of market pricing, consumer demand patterns and future asset development…

To continue reading the full article, and the latest developments in the GB energy market, please contact v.truman@cornwall-insight.com for a month’s trial of Energy Spectrum.

COVID-19 and wholesale pricing Energy Spectrum snippet

Related thinking

Commercial and market outlook

Ofgem outlines thinking on protecting credit balances and RO payments

This article is an extract from our Energy Spectrum publication issued on Monday 25 April. If you are interested in receiving critical policy, regulatory, market and transactional developments across the energy sector, and would like a free full sample of Energy Spectrum, please request a copy here. You only need...

Announcement

Our GB 2021 Consultancy highlights

We are independent advisors operating across the energy value chain. Our team of passionate energy experts has supported over 120 customers in 2021. This includes generators, developers, investors, network companies and public bodies.Here is a small selection of our work in 2021: Cornwall Insight’s consultancy team provides high-quality insight across...

FAQs

FAQ for changes in our Energy Spectrum publications

Why is the Energy Spectrum changing? We have recently launched our new customer portal where you can see all of your subscription insight services in one place, easily access all the archived issues, as well as download all your publications and reports. To access these, you will need to set...

Net zero corporates and ESG

The stakes are higher than they seem: the current energy challenge and net zero

It has been an incredibly challenging week in the UK energy sector, and attention has rightly focussed on consumer protection, and indirectly on the state of the energy supply markets. However, it would be a mistake to believe that the ramifications of supplier failure will be limited only to this...

Home supply and services

Rocketing energy prices and failing suppliers—what is happening?

Sky high gas prices and energy suppliers going out of business have been key headlines in the news over recent weeks, but what is actually happening?  Through the COVID-19 pandemic we saw much lower gas prices, which have been surging upwards since the spring and risen rapidly through the summer, a time...

Business supply and services

Have we given up on competition in the retail market?

“Q: How does 2pm on Wednesday sound? A: Assuming we still have a functioning energy market that'd be great”.  It’s not really what you expect to see in an email at 5pm on a Friday when trying to arrange a call. But then these are certainly not normal times. In this Energy Perspective, we will...

Home supply and services

Consolidation in the energy market predicted to continue

It has been a turbulent time for the retail energy market, experiencing a period of consolidation with mergers and supplier exits. This supplier consolidation is expected to continue in the near term. If suppliers fail to shift their business models for the new world it is likely to continue, according...

Home supply and services

“Green” tariffs in the spotlight as BEIS commences review

With the announcement on 16 August of a call for evidence on Designing a Framework for Transparency of Carbon Content in Energy Products, consultant Josephine Lord looks at the issues being considered and what the future may hold for so-called “green” tariffs. The call for evidence is the first step...