09 December 2022

Headlines

This week saw the continuation of bullish price movements across most gas and power wholesale contracts. We continue to note ongoing pricing disparity between day-ahead contracts and those further out on the forward curve, with contracts into Q1-23 generally higher than shorter dated contracts. Subsequently, we saw the majority of gas and power contracts rise week-on-week. Day-ahead gas rose 8.5% to 358.00p/th, following the continuation of colder temperatures encouraging higher demand from gas-fired assets to meet higher trending demand. Day-ahead power rose 11.0% to £394.00/MWh, mirroring trends set from its gas equivalent contract and helped further by lower levels of wind generation currently being experienced more generally. Furthermore, January 23 gas was up 1.2% at 343.00p/th, and February 23 gas increased 0.9% to 347.00p/th. The majority of seasonal gas contracts saw gains this week, up by 3.3% on average, while both summer 23 and winter 23 gas increased 3.4% and 2.9% respectively, lifting to 339.00p/th and 352.00p/th. Like gas, most seasonal power contracts boosted this week, up on average by 2.4%, as summer 24 power rose 3.4% to £230.00/MWh, while winter 24 climbed 6.3% to £255.00/MWh.

Baseload electricity

Forward curve comparison

  • Day-ahead power rose 11.0% to £394.00/MWh, following mirroring the bullish trends set from its gas equivalent contract and lower trending levels of wind outturn observed across the week.
  • January 23 power slipped 18.2% at £450.00/MWh and February 23 power decreased 16.7% to £450/MWh.

Annual October contract

  • Q123 power moved 14.4% lower to £411.00/MWh.
  • The annual April 23 contract remained unchanged at £320.5/MWh, though is 225.4% higher than the same time last year (£98.50/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was up 44.2% to £627.50/MWh, following baseload power higher.
  • January 23 peak power declined 11.0% at £797.20/MWh, and February 23 peak power decreased 12.3% to £732.47/MWh.

Annual October contract

  • The annual April 23 peak power rose 1.7% to £395.00/MWh.
  • This is 241.0% higher than the same time last year (115.83/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • Most seasonal power contracts saw gains this week, rising on average by 2.4%, however we note the summer 23 and winter 23 contracts remained unchanged week-on-week
  • However, summer 24 rose 3.4% to £230.00/MWh.

Seasonal baseload power curve

  • Like baseload contracts, seasonal peak power contracts boosted this week, up 1.7% on average.
  • Summer 23 and winter 23 peak power increased 1.4% and 2.0% respectively, rising to £350.00/MWh and £440.00/MWh.

Commodity price movements

Oil and coal

  • Brent crude prices fell week-on-week, down 5.7% to average $80.35/bl, a fourth consecutive week of price decline.
  • 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 and general bearish market sentiment over economic slowdown.

Carbon (UK and EU ETS)

  • EU and UK ETS prices saw bullish price movements this week. EU ETS climbed 6.6% to average €87.74/t, while UK ETS carbon increased 9.6% to £78.17/t.
  • EU and UK ETS prices continue to gain support from colder temperatures across both geographies, acting to encourage higher demand for gas and fossil fuel-fired assets.
  • An upcoming pause on December auctions from 20 December to 8 January is also providing support to current EUA price levels.

Wholesale price snapshot – Friday-on Friday

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