Gas and wind is like a perfect modern day romance, full of volatility, unpredictability and ups and downs.
In the UK, the share of wind in the power mix rose from just around 7% back in 2016 to almost one-third in 2023, while the phase-out of coal-based capacity continued.
The share of gas-fired power generation continued to decline as well amidst the rapid expansion of wind, and dropped from over 45% in 2016 to around 30% these days.
However, the balancing role of gas-fired power plants is becoming more important than ever as showcased by the extremely strong negative correlation factor (-0.75) between gas and wind power generation.
This trend is set to continue over the medium-term across all over Northwest Europe, as renewable capacity expands and coal is phased-out.
This will require a robust and flexible gas supply value chain, more short-term trading and more sophisticated risk trading management strategies.
Source: Greg Molnar (LinkedIn)
