02 December 2022

Headlines

This week saw the continuation of bullish price movements across gas and power wholesale contracts, but we continue to note the ongoing pricing disparity between day-ahead contracts and those further out on the forward curve. Day-ahead gas rose 117.1% to 330.00p/th, with notably colder temperatures observed this week, driving demand higher for more expensive forms of generation such as CCGT’s and gas peaking plant. Similarly, day-ahead power rose 39.2% to £355.00/MWh, driven by tight system margins. On Tuesday 29 November, National Grid ESO issued a Capacity Market Notice (CMN), amid expectations that demand would outstrip supply by 177MW from 7pm. This saw N2EX day-ahead hourly prices of £1,000/MWh for the evening. The CMN was subsequently cancelled later that day, however. Elsewhere, January 23 gas was up 6.9% at 339.00p/th, and February 23 gas increased 4.7% to 344.00p/th. All seasonal gas contracts boosted last week, up by 5.7% on average, while both summer 23 and winter 23 gas increased 7.9% and 7.0% respectively, lifting to 328.00p/th and 342.00p/th. Like gas, all seasonal power contracts rose this week, up on average by 6.6%, as summer 23 and winter 23 expanded 9.4% and 7.3% respectively, rising to £303.00/MWh and £338.00/MWh.

Baseload electricity

Forward curve comparison

  • Day-ahead power rose 39.2% to £355.00/MWh, following periods of notably low wind outturn in the week, tightening system margins significantly.
  • January 23 power climbed 24.4% at £550.00/MWh and February 23 power increased 18.4% to £540.00/MWh.

Annual October contract

  • Q123 power moved 15.7% higher to £480.00/MWh.
  • The annual April 23 contract rose 8.3% to £320.50/MWh, 254.1% higher than the same time last year (£90.50/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was up 45.0% to £435.25/MWh, following baseload power higher.
  • January 23 peak power gained 10.5% at £895.25/MWh, and February 23 peak power increased 30.4% to £835.50/MWh.

Annual October contract

  • The annual April 23 peak power rose 7.8% to £388.25/MWh
  • This is 354.7% higher than the same time last year (£85.38/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • All seasonal power contracts experienced gains this week, rising on average by 6.6%.
  • Summer 23 and winter 23 expanded 9.4% and 7.3% respectively, rising to £303.00/MWh and £338.00/MWh.

Seasonal baseload power curve

  • Like baseload, all seasonal peak power contracts saw similar upwards movements this week, up 7.9% on average.
  • Summer 23 and winter 23 peak power increased 9.2% and 6.7% respectively, falling to £345.25/MWh and £431.25/MWh.

Commodity price movements

Oil and coal

  • Brent crude prices fell week-on-week, down 1.8% to average $82.31/bl, a third consecutive week of price decreases
  • Uncertainty in global commodity markets continue to exacerbate volatility in price, particularly evident over recent months
  • Recent price drops continue to be caused, in part by fears of reduced demand from the China due to the strict Covid-19 lockdown measures which remain imposed.

Carbon (UK and EU ETS)

  • EU and UK ETS prices saw bullish price movements this week. EU ETS climbed 8.4% to average €82.31/t, while UK ETS carbon increased 4.6% to £71.31/t
  • EU and UK ETS prices were supported by colder temperatures acting to encourage demand for gas and fossil fuel-fired assets

Wholesale price snapshot – Friday-on Friday

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