Headlines – UK Wholesale Gas and Electricity Prices
Latest news on UK wholesale energy market trends, with weekly, monthly, and yearly price updates on gas and electricity (day-ahead and year-ahead), coal, EUA carbon, UKA carbon, and Brent crude oil, plus key cost movements.
Tracked power and gas contracts registered mostly bullish movements last week, with the exception of day ahead baseload power which dropped by 11.2%. Day-ahead gas rose 9.2% to 82.70p/th with support from the onset of Norwegian maintenance expected across the end of August and into the start of September; as well as reduced UK exports to the Continent and reduced output from the UK Continental Shelf. September 25 gas was up 9.7% at 83.50/th, and October 25 gas increased 9.6% to 83.38p/th. Likewise, all seasonal gas contracts boosted last week, up by 4.6% on average; with longer term contracts finding support from developments in the Russia-Ukraine conflict suggesting reduced expectation of a ceasefire agreement. Both winter 25 and summer 26 gas increased 6.7% and 5.3% respectively, lifting to 89.45p/th and 80.08p/th, and annual October 25 gas rose 6.0% to 84.77p/th. Day ahead power prices settled at prices lower than the previous week due to forecasts of higher wind generation, which in particular is expected to peak on 26 August. However, September 25 baseload power contracts saw bullish influence (up 6.5%) from the extension of outages across UK nuclear reactors, including Hartlepool Reactor 1 and Reactor 2. All seasonal power contracts boosted this week, up on average by 3.9%, as winter 25 power expanded 5.3% to £84.75/MWh, while summer 26 rose 2.7% to £73.00/MWh.
Baseload wholesale electricity price
Forward curve comparison
- Day-ahead power fell 11.2% to £75.50/MWh, following expectations of higher levels of wind generation However, September 25 power climbed 6.5% to £77.75MWh and October 25 power increased 5.9% to £76.25/MWh.
Annual October contract
- Q425 power averaged £83.00/MWh across the week, up 5.4% on the previous week.
- The annual October 25 contract rose 4.1% to £78.88/MWh, 0.5% lower than the same time last year (£79.30/MWh).
Peak wholesale electricity price
Forward curve comparison
- Day-ahead peak power was down 0.9% to £86.75/MWh, following movements seen across its baseload counterpart.
- September 25 peak power gained 5.7% to £83.25/MWh, and October 25 peak power increased 5.1% to £87.75/MWh.
Annual October contract
- Annual October 25 peak power rose 3.5% to £90.83/MWh.
- This is 12.5% lower than the same time last year (£103.85/MWh).
Seasonal power prices
Seasonal baseload power contracts
- All seasonal power contracts boosted last week, up on average by 3.9%.
- Winter 25 power expanded 5.3% to £84.75/MWh, while summer 26 rose 2.7% to £73.00/MWh.
Seasonal peak power curve
- All seasonal peak power contracts rose last week, up 3.6% on average.
- Winter 25 and summer 26 peak power increased 3.6% and 4.5% respectively, rising to £100.50/MWh and £75.25/MWh.
Commodity price movements
Oil and coal
- Brent crude oil remained relatively level across the reporting period, registering slight increases day-on-day as the week progressed
- As a result, prices rose from $65.92/bl on 18 August to $67.17/bl on 21 August, finding influence as escalating tensions between Russia and Ukraine alongside a larger-than-expected draw in US crude inventories supported higher prices
- Moreover, a Ukrainian attack on a pipeline in Russia halted deliveries of Russian oil to Hungary, providing further volatility with regards to the Russia-Ukraine conflict. As such, there is no indication that Russia is ready for ceasefire negotiations, potentially influencing stronger sanctions and tariffs from countries like the US
- Despite US President Donald Trump announcing a 25% tariff on India for continuing to import Russian oil, Russia signalled that it has a mechanism to ensure crude oil continues to flow to India despite the US tariffs
- Due to expectations of oversupply, an imbalance between supply and demand may lead to strong price losses as global oil demand remains subdued
Carbon (UK and EU ETS)
- Carbon prices remained subdued across the reporting period (€71.94/t in the EU and £51.41/t in the UK – both up slightly from the previous week), as investors continued to evaluate the economic outlook due to speculation surrounding a potential Federal Reserve rate cut
- However, EU ETS carbon prices saw a weekly peak of €72.68/t on 21 August following the announcement of the EU/US trade agreement. Despite the agreement however, investor sentiment has remained cautious as the full implications of the deal are still being unraveled
- As such, concerns of long-term impacts to vulnerable sectors such as steel and the automotive market caused by these tariffs are injecting caution in the market
- We have seen that since the middle of August, the correlation between carbon prices and oil prices has been strengthening – leading to increases in oil prices acting to support carbon prices
- Due to concerns over the long-term impact of the EU/US trade deal, there are expectations that demand and industrial output may see a reduction, lowering demand for carbon allowances and supporting lower prices
Wholesale price snapshot – Friday-on Friday
Analysis provided by: Cornwall Insight