Today Orsted announced that it is abandoning the Hornsea 4 wind project, which it won in last summer’s AR6 CfD auction at a strike price 58.86 £/MWh in 2012 prices, but over 80 £/MWh in current prices, blaming supply chain inflation and the interest rate environment. This adds to growing pressure on the government over its strategy on wind, particularly when AR6 had been seen as such a success following the failure of the AR5 auction to attract any bids for offshore wind.
Power and gas markets have been firmer over the last week following a cold snap across Europe that led to unseasonal heating demand and was compounded by reduced availability of French nuclear output as a result of outages. The LNG send-out rate remains high, however and gas in storage has continued to build.
Markets may also be benefiting from more positive signs as to the prospect of talks on trade commencing between the US and China. This is potentially a double-positive so far as the European energy markets are concerned, as not only could progress in talks lead to a better outlook for the world economy to which energy consumption tends to be positively correlated, but could also lead to China reducing recently introduced barriers to US gas imports, increasing competition for LNG on the global market.
Turing to the EU gas storage mandate, while a proposal for more flexibility continues to work its way through the European Parliament, it has been reported that Germany has already pre-emptively cut its mandate from 90 to 80%.
| Commoditiy | Front contract (£p/therm) | Winter 25/26 (£p/therm) | Summer 26 (£p/therm) | Winter 26/27 (£p/therm) |
|---|---|---|---|---|
| Price | 83.07 | 93.13 | 80.81 | 87.09 |
| Weekly Change | 6.40 | 6.88 | 6.80 | 6.18 |
| Commoditiy | Front contract (£/MWh) | Winter 25/26 (£/MWh) | Summer 26 (£/MWh) | Winter 26/27 (£/MWh) |
|---|---|---|---|---|
| Price | 76.00 | 84.83 | 71.63 | 80.15 |
| Weekly Change | 4.80 | 4.64 | 4.26 | 3.71 |
| Commoditiy | US Gas ($/mmbtu) | Brent ($/b) | EUA (€/MT) | UKA (£/MT) |
|---|---|---|---|---|
| Price | 3.63 | 60.96 | 70.27 | 51.87 |
| Weekly Change | 0.31 | -2.16 | 4.45 | 4.25 |
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