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.
All tracked gas, and most tracked power contracts registered bullish movements last week, with the exception of baseload day ahead power. Day-ahead gas remained relatively stable last week and rose 2.5% to 80.25p/th. Gas contracts saw support from supply threats placed on the EU by Qatar, and geopolitical uncertainty in the market as President Trump’s deadline for Russia to engage in peace talks with Ukraine draws closer. However, unlike its gas counterpart, day-ahead baseload power saw a slight week-on week loss, finishing the week at £75.48/MWh, finding influence from expected higher wind output toward the end of the week due to Storm Floris; however, stronger losses were limited by a reduction in French nuclear availability. September 25 gas was up 2.7% to 83.45p/th, and October 25 gas increased by 2.0% to 84.58p/th. Likewise, all seasonal gas contracts boosted last week, up by 1.7% on average, with both winter 25 and summer 26 gas rising 1.9% and 2.1% respectively, lifting to 92.03p/th and 83.63p/th; seasonal contracts saw support from EU nations ramping up efforts to reduce imports of Russian natural gas. All seasonal baseload power contracts saw gains last week climbing 1.5% on average, as winter 25 power expanded 1.6% to £84.95/MWh, while summer 26 rose 1.7% to £73.25/MWh.
Baseload wholesale electricity price
Forward curve comparison
- Day-ahead power fell 0.9% to £75.48/MWh, following forecasts of higher wind output toward the end of the week
- However, September 25 power climbed by 0.7% to £79.25/MWh while October 25 power rose 2.0% to £76.25 /MWh.
Annual October contract
- Q425 power averaged £83.40/MWh across the week, up 1.7% on the previous week.
- The annual October 25 contract gained 1.7%, up to £79.10/MWh, 0.8% higher than the same time last year (£78.45/MWh).
Peak wholesale electricity price
Forward curve comparison
- Day-ahead peak power was up 12.9% to £86.00/MWh, opposing the movement seen across its baseload counterpart
- September 25 peak power gained 1.1% to £84.45/MWh, and October peak power increased 1.6% to £88.25/MWh.
Annual October contract
- The annual October 25 peak power rose 1.2% to £91.30/MWh.
- This is 11.4% lower than the same time last year (£102.75/MWh).
Seasonal power prices
Seasonal baseload power contracts
- All seasonal power contracts increased last week, up on average by 1.5%.
- Winter 25 power boosted by 1.6% to £84.95/MWh, while summer 26 rose 1.7% to £73.25MWh.
Seasonal peak power curve
- All seasonal peak power contracts saw gains last week, up 1.2% on average.
- Winter 25 and summer 26 peak power boosted 1.1% and 1.5% respectively, to £100.65/MWh and £75.50/MWh.
Commodity price movements
Oil and coal
- The average price of Brent crude oil stood at $71.31/bl last week – a rise of 3.8% week-on-week.
- On 27 July, the EU and US reached a trade deal which will see the EU purchase $750mn in US energy and military equipment; President Trump stated “energy is a very important component” of the deal. For investors, the deal is thought to ease concerns over supply, boost economic certainty and drive up energy demand; acting to lift oil prices.
- In addition, on 28 July President Trump threatened Russia with sanctions and secondary tariffs if it does not end the Ukraine war in “about 10 or 12 days”, which is much earlier than the previous deadline of early September; this raised concerns over further supply disruptions from Russia, supporting higher oil prices. By 29 July Trump confirmed that Russia had “10 days from today” – which marks 8 August – before facing penalties from the US.
- On the other hand, during the week additional bearish factors limited further price rises, including an announcement from Turkey’s Energy Minister that the country has discovered 57mn barrels of oil reserves so far this year, easing potential concerns over supply.
Carbon (UK and EU ETS)
- Both UK and EU carbon prices rose week-on-week, averaging £51.17/t (up by 3.1%) and €72.09/t (up by 3.2%)
- During the week, prices saw support from higher forecast temperatures into the following week – particularly across Central Western Europe – which would increase demand for carbon intensive cooling appliances.
- However, EU ETS prices dropped toward the end of the week due to a recovery in wind output in Northwest Europe; with the UK ETS price tracking a similar pattern as wind output increases due to Storm Floris; both reducing demand for carbon intensive sources of power.
- Looking ahead, on 27 July the EU announced its plans to purchase $750bn of US oil, LNG, and nuclear fuels over the next three years – with an aim to reduce reliance on Russian gas – which has sparked criticism that it contradicts the EU’s climate ambitions. Details on how this US energy is to be procured remains vague, and it is thought that the deal will leave European companies having to negotiate directly with US suppliers.
- Furthermore, on 30 July, President Trump announced a 25% tariff on Indian goods; for the EU, this may cause supply chain disruption and rising prices. While not directly impacting carbon prices currently, the level of uncertainty for those participating in the market may drive prices moving forward.
Wholesale price snapshot – Friday-on Friday
Analysis provided by: Cornwall Insight