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Markets & Trading This week Wholesale gas prices to fall further in 2016 Forecast by analysts at Icis piles more political pressure on suppliers to cut their energy tariffs Wholesale gas prices will con- tinue to fall in 2016, according to analysts at Icis, piling further pressure on suppliers to cut tariffs. Reduced demand for liquefied natural gas (LNG) in places such as South Korea and Japan led to oversupply last year, according to the 'Icis Power Index Analysis 2015'. It says the trend looks likely to continue this year, with increased worldwide production, most notably from shale gas in the US, set to add to the global glut. Ben Wetherall, head of gas at Icis, said: "With a deep liquid gas market and plenty of capacity to regasify LNG imports, Britain is anticipated to be a key beneficiary of the global LNG oversupply." UK gas prices were also brought down in 2015 by the continuing fall in the price of oil. Brent crude lost more than a third of its value, finishing the year on $36.17/bbl. The report foresees a similarly bearish oil market in 2016, as tensions between Opec kingpins Saudi Arabia and Iran make cuts to production unlikely. The Icis report comes as political pressure mounts on energy companies to cut their tariffs in response to fall- ing wholesale costs. During prime minister's questions earlier this month, David Cameron admitted: "They're not falling as fast as I would like." The report revealed the extent to which wholesale prices of both gas and electricity fell during 2015. Power prices dropped by 23 per cent, reaching a five-year low of almost £36.524/MWh. Gas prices fell by 34 per cent, hitting 32p/therm, the lowest price in six years. TG ElEctrIcIty Grid reveals cost of November NISM National Grid spent £2.4 million balancing the grid on 4 Novem- ber 2015, when the first Notice of Inadequate System Margin (NISM) in three years was issued, a letter to the chair of the Energy and Climate Change Select Committee has revealed. The NISM was issued for the hours 16.30 to 18.30, aer a string of unplanned outages and an extended period of low wind. Committee chair Angus MacNeil asked for information about the costs incurred aer Cordi O'Hara, director, UK sys- tem operator at National Grid, appeared before the committee to explain what happened. O'Hara said National Grid called on 200MW of intercon- nector capacity from Ireland and 43MW of Demand-Side Balancing Reserve, costing £181,300 and £25,000-£30,000 respectively. She didn't detail how much it cost it to call up about 400MW of Short Term Operating Reserve. The overall cost of balancing actions on the day was £2.4 mil- lion, with £1.05 million of that spent during the NISM period. EmIssIons Carbon prices up in 2015, volumes down Europe's carbon market was characterised by rising prices and falling volumes in 2015, according to a report from Thomson Reuters. The average price of EU emis- sion allowances over the year was €7.70/tonne, a 29 per cent increase on 2014. But volumes fell by 29 per cent, meaning the overall value of trading fell by 8 per cent to around €37 billion. The 'Carbon Market Monitor' attributes the trends to the EU's continued attempts to get rid of a surplus of allowances using a process called backloading; delaying their auction until the end of the decade. The EU back- loaded 400 million allowances in 2014 and 300 million last year. It is expected to hold back 200 million allowances in 2016. The report says the reduced extent of backloading should help to increase volumes over the next year, as the overall number of allowances being auctioned will actually increase. It predicts a 7 per cent rise in volumes in 2016, assisted by the growth of trading on secondary markets. A decision on what to do with the backloaded allowances also helped to push prices higher and hold down volumes in 2015. In July, the European Parliament voted to create the Market Stability Reserve, which will take allowances off the market if the surplus exceeds a certain threshold and return them to the market if a deficit arises. The backloaded allowances will be transferred to the reserve. Cameron: energy prices not falling fast enough UtIlIty WEEK | 22nd - 28th JanUary 2016 | 29 Renewables Europe's renewable generation increased by 87TWh in 2015, a new annual record and getting on for double the average of 49TWh for the previous five years, according to a report by the environmental campaign group Sandbag. More than three-quarters of the increase came from just three countries: Germany, the UK and Italy. The only other countries that came close were France and Belgium Bulgaria Czech Rep Denmark Germany Estonia Ireland Greece Spain France Croatia Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta Netherlands Austria Poland Portugal Romania Slovenia Slovakia Finland Sweden UK Change in renewable generation by country, 2015 vs 2014 35 30 25 20 15 10 5 0 -5 TWh