Demand trends: August sees highest demand since March

This article was originally published on 25 August 2020 in our ‘SEM and commodity pricing report’.  

In this week’s blog we take a look at the latest fundamental developments impacting power prices in the SEM. This will see us take a look at wind generation in the SEM this year, while assessing demand trends since COVID-19 mitigation measures were eased as Ireland transitioned into Phase 3 of its roadmap for easing restrictions. 

Wind generation  

Figure A observes the average wind output per month out until the end of July and compares them with the levels experienced in the previous year.  

The analysis shows that so far this year wind generation has averaged 11.7% higher compared against the same time period last year. This year has seen wind average 36.7GWh, 3.9GWh higher than in 2019 (32.8GWh). 

2020 has also seen only two months have lower monthly output on average against its 2019 counterpart, these exceptions being July (9.4% lower) and April (36.8% lower). The remaining five months of the year have typically averaged 26.6% above the previous year.  

Over this same period day-ahead power prices in the SEM have fallen considerably, partly driven lower by the more frequent periods of higher wind output mentioned above, which has displaced more expensive thermal generation out of the generation stack. Power prices from January to July have averaged 42% lower on average year-on-year. However, this is not to dismiss the impacts of falling power demand from COVID-19 mitigation measures, along with the longer-term trend of falling gas prices. 

Power demand  

Since June we have noticed a steady increase in demand levels, which had fallen throughout March to May. As we come to the end of August demand levels sit at a daily average of 93.3GWh – making them the highest levels observed since late March. Last week saw daily demand peak at 100.3GWh on 18 August, a near four-month high.  

Since Phase 3 of the Irish governments roadmap for easing restrictions began back on 29 June weekday demand levels have somewhat plateaued – averaging 94.7GWh. However, we have observed in the past two weeks upward growth in demand, with levels averaging 98.3GWh last week, representing an increase of 1.6GWh on average for weekday demand since Phase 3 went live.   

For more content on wholesale price and fundamental developments in the SEM do check out our rebranded SEM and commodity pricing report. This is a weekly report covering Irish power prices, along with NBP gas and wider international commodity markets (Brent crude oil, coal and EU ETS carbon). For more information please contact j.camish@cornwall-insight.com.  

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