Headlines
This week, we observed price decline across all tracked GB gas and power wholesale contracts, in what continues to be a volatile period of time for wholesale energy both in GB as well as continental Europe, with conflicting geopolitical price levers in the form of changes to Russian gas supplies, combined with the global economy being on the cusp of a recession. Day-ahead gas fell 45.0% to 300.00p/th, following the continuation of higher temperatures in the week and a steady influx of LNG, softening near-term supply/demand dynamics. Similarly, day-ahead power fell 37.0% to £315.00/MWh, linked to the strong downward movements of the equivalent gas contract and select periods of higher wind outturn seen in the week. Subsequently, October 22 gas was down 36.8% at 405.90p/th, and November 22 gas decreased 36.7% to 498.64p/th. Similar to near-term contracts, all seasonal gas contracts declined last week, down by 32.7% on average, while both winter 22 and summer 23 gas dropped 22.7% and 37.3% respectively, subsiding to 592.45p/th and 428.10p/th. Seasonal power contracts declined this week, down on average by 32.1%, as winter 22 power decreased 21.3% to £630.00/MWh, while summer 23 fell 38.5% to £335.00/MWh.
Baseload electricity
Forward curve comparison
- Day-ahead power fell 37.0% to £315.00/MWh, following following strong downward movements of the equivalent gas contract and select periods of higher wind outturn seen in the week.
- October 22 power slipped 32.5% at £425.00/MWh and November 22 power decreased 23.3% to £711.00/MWh.
Annual October contract
- The Q422 power contract moved 20.9% lower to £625.00/MWh.
- The annual October 22 contract lost 28.3% to £482.5/MWh, 541.2% higher than the same time last year (£75.25/MWh).
Peak electricity
Forward curve comparison
- Day-ahead peak power was down 39.6% to £387.00/MWh, following baseload power lower.
- October 22 peak power declined 14.7% at £590/MWh, and November 22 peak power decreased 17.7% to £1085/MWh.
Annual October contract
- The annual October 22 peak power rose 17.6% to £673.5/MWh
- This is 741.3% higher than the same time last year (80.05/MWh).
Seasonal power prices
Seasonal baseload power contracts
- All seasonal power contracts experienced losses this week, falling on average by 32.1%.
- Winter 22 power decreased 21.3% to £630.00/MWh, while summer 23 fell 38.5% to £335.00/MWh.
Seasonal baseload power curve
- All seasonal peak power contracts declined this week, down 26.6% on average.
- Winter 22 and summer 23 peak power dropped 11.0% and 29.7% respectively, falling to £940.00/MWh and £407.00/MWh.
Commodity price movements
Oil and coal
- Brent crude prices dropped 2.9% last week to average $96.91/bl, reversing gains set in the previous week
- Reports emerged last week that the OPEC+ Joint Technical Committee (JTC) has forecast a notable surplus in the oil market for 2022, with this potential oversupply in the market placing bearish sentiment on prices
- Added to this, the continuation of fears of an impending global recession has cast doubt over demand for oil for the remainder of 2022 – compounding further price decline
Carbon (UK and EU ETS)
- EU and UK ETS prices saw collective downward movements last week. EU ETS fell 12.3% to average €80.55/t, whilst UK ETS carbon eased 0.8% to €94.28/t.
- EU ETS prices registered the most substantial average losses week-on-week, a likely consequence of increased available auction volumes as the market entered September
- For the UK ETS, warmer trending weather continues to place less demand on heating and reduces demand for fossil fuel generating plant
Wholesale price snapshot – Friday-on Friday
