20 January 2023

Headlines

The majority of wholesale gas and power contracts experienced week-on-week losses this week, with day-ahead baseload power being the notable outlier. We continue to see the downturn of wholesale energy prices, particularly in comparison to pre-Christmas levels. Furthermore, day-ahead gas fell 5.1% to 157.50p/th, following the continued receipt of higher levels of LNG deliveries to the UK, coupled with strong levels of EU gas in storage – easing concerns over future supply and demand balancing into the remainder of the winter season. On the contrary, day-ahead power rose 4.5% to £172.5/MWh, due to lower levels of wind outturn observed across the middle of the week. February 23 gas was down 4.3% at 156.00p/th, and March 23 gas decreased 4.9% to 156.00p/th. Elsewhere, all seasonal gas contracts declined last week, down by 2.9% on average. Summer 23 and winter 23 gas dropped 4.8% and 4.4% respectively, subsiding to 161.00p/th and 185.50p/th. Like gas, seasonal power contracts declined this week, down on average by 4.3%, as summer 23 power decreased 3.1% to £156.00/MWh, while winter 23 fell 5.6% to £185.00/MWh.

Baseload electricity

Forward curve comparison

  • Day-ahead power rose 4.5% to £172.50/MWh, following periods of lower wind outturn observed, particularly in the middle of this week.
  • February 23 power slipped 6.1% to £155.00/MWh and March 23 power decreased 7.9% to £151.00/MWh.

Annual October contract

  • Q223 power moved 3.4% lower to £156.00/MWh.
  • The annual April 23 contract lost 4.5% to £170.50/MWh, 66.3% higher than the same time last year (£102.50/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was down 0.2% to £183.00/MWh, following baseload power lower
  • February 23 peak power declined 8.7% to £192.00/MWh, and March 23 peak power decreased 10.7% to £171.00/MWh

Annual April contract

  • The annual April 23 peak power rose 12.4% to £204.50/MWh.
  • This is 66.9% higher than the same time last year (£122.50/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • All seasonal power contracts declined this week, down on average by 4.3%.
  • Summer 23 power decreased 3.1% to £156.00/MWh, while winter 23 fell 5.6% to £185.00/MWh.

Seasonal baseload power curve

  • All seasonal peak power contracts declined this week, down 11.9% on average.
  • Summer 23 and winter 23 peak power dropped 9.1% and 14.6% respectively, falling to £172.00/MWh and £237.00/MWh.

Commodity price movements

Oil and coal

  • Brent crude prices climbed week-on-week, up 4.5% to average $85.61/bl.
  • Future Chinese demand growth has registered signs of improvement again this week, recognising China as of the largest crude importing countries, supported further by the ending of the majority of national COVID restrictions.
  • Similarly, an optimistic inflation recovery outlook from the US towards the back-end of the week also helped price climb as the week matured.
  • However, we do recognise that the current global oil market remains volatile, particularly with fears of an impending global recession and subsequent concerns over future global demand.

Carbon (UK and EU ETS)

  • EU and UK ETS prices saw bullish price movements this week, reversing two consecutive weeks of price decline. EU ETS climbed 1.6% to average €81.31/t, while UK ETS carbon rose 0.3% to £67.52/t.
  • For this recorded week more specifically, we have experienced the return of a cold snap to the UK and North-West Europe, encouraging higher demand from gas and other fossil fuel fired assets and in turn, increasing demand for EUA’s to cover the increase in carbon emissions.
  • Periods of lower wind outturn in the week also contributed to higher fossil fuel fired generation.

Wholesale price snapshot – Friday-on Friday

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