23 September 2022

Headlines

This week, we observed the majority of wholesale gas and power contracts in GB retreat, in what continues to be a volatile period for wholesale energy prices, both in the UK as well as European markets. EU intervention on the current energy crisis continues to provide bearish sentiment for prices. As a result, day-ahead gas fell 11.5% to 230.00p/th, with some specific bearish drivers such as higher wind outturn seen at points during the week leading to reduced demand for gas-for-power generation. Some sentiment-based decline can also be put on the downward movement of prices, as the EU looks to tackle the on-going energy supply crisis. Day-ahead power fell 34.9% to £192.00/MWh, largely following the strong bearish movements of gas prices. October 22 gas was down 14.9% at 290.34p/th, and November 22 gas decreased 10.8% to 422.54p/th. Most seasonal gas contracts declined last week, down by 4.5% on average, as winter 22 and summer 23 gas dropped 6.1% and 3.6% respectively, subsiding to 481.00p/th and 432.55p/th. Some seasonal power contracts fell this week, but more significant rises in winter 22 and summer 24 prices week-on-week, tilted average prices to climb – up 3.9% on average.

Baseload electricity

Forward curve comparison

  • Day-ahead power fell 34.9% to £192.00/MWh, following the strong downward movements set from its equivalent gas contract.
  • October 22 power slipped 10.6% to £295.00/MWh and November 22 power increased 1.7% to £610.00/MWh.

Annual October contract

  • Q422 power moved 11.3% higher to £540.00/MWh.
  • The annual October 22 contract rose 6.9% to £457.5/MWh, 416.9% higher than the same time last year (£88.5/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was down 32.3% to £264.25/MWh, following baseload power lower.
  • October 22 peak power declined 12.4% to £370.25/MWh, and November 22 peak power increased 7.1% to £959.25/MWh.

Annual October contract

  • The annual October 22 peak power rose 3.5% to £540.75/MWh.
  • This is 496.7% higher than the same time last year (£90.63/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • Most seasonal power contracts boosted this week, up on average by 3.9%.
  • Winter 22 power expanded 13.3% to £570.00/MWh, while summer 23 fell 2.3% to £345.00/MWh.

Seasonal baseload power curve

  • The majority of seasonal peak power contracts declined this week too, down 1.9% on average.
  • Winter 22 and summer 23 peak power dropped 3.2% and 4.0% respectively, falling to £697.25/MWh and £384.25/MWh.

Commodity price movements

Oil and coal

  • Brent crude prices fell 2.6% this week to average $90.98/bl.
  • Concerns over future demand for the remainder of 2022, as a consequence of an impending global recession, remained a prominent bearish fundamental for brent crude prices last week and has continued to do so for many recent weeks.
  • However, sustained losses were capped by some bullish price influence in the week, with reports that Russian president Vladimir Putin announced a partial military mobilisation, escalating the war in Ukraine.

Carbon (UK and EU ETS)

  • EU and UK ETS prices saw downward movements this week. EU ETS fell 1.3% to average €69.79/t, whilst UK ETS carbon eased 5.2% to £74.14/t.
  • Prices for carbon remain volatile at a time where the uncertainty surrounding fossil fuel supply into Europe and the UK is a prominent lever for price movement, particularly as Russia has reportedly escalated its war efforts.
  • Like many other commodity markets, fears of a global recession are prompting financial traders of EUA’s to ‘sell-off’.

Wholesale price snapshot – Friday-on Friday

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