25 November 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 11.8% to 152.00p/th, following the gradual decline in seasonal average temperatures this week, placing higher demand on gas-fired assets to meet demand coupled with select periods of system undersupply observed throughout the week. Day-ahead power rose 64.5% to £255.00/MWh, following the upward price direction of its gas equivalent contract and forecasts of significantly tightened system margins expected early next week – driving a £113.00/MWh price rise from 24 into 25 November. Elsewhere, December 22 gas was up 10.4% at 286.00p/th, and January 23 gas increased 6.4% to 317.00p/th. The majority of seasonal gas contracts boosted last week, up by 2.0% on average, while both summer 23 and winter 23 gas increased 9.4% and 6.5% respectively, lifting to 304.00p/th and 319.50p/th. All seasonal power contracts saw gains this week, up on average by 5.0%, as summer 23 and winter 23 expanded 9.7% and 7.7% respectively, rising to £277.00/MWh and £315.00/MWh.

Baseload electricity

Forward curve comparison

  • Day-ahead power rose 64.5% to £255.00/MWh, predominately driven by a significant upturn in price on Friday 25 November, with the ESO forecasting notably tight system conditions early next week.
  • December 22 power climbed 18.1% at £310.00/MWh and January 23 power decreased 0.7% to £442.00/MWh.

Annual October contract

  • Q123 power moved 12.2% higher to £415.00/MWh.
  • The annual April 23 contract rose 8.6% to £296/MWh, 234.5% higher than the same time last year (£88.5/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was up 53.7% to £300.25/MWh, following baseload power higher.
  • December 22 peak power gained 11.3% at £392.25/MWh, and January 23 peak power increased 4.5% to £810.25/MWh.

Annual October contract

  • The annual April 23 peak power rose 6.5% to £360.25/MWh
  • This is 238.6% higher than the same time last year (106.38/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • All seasonal power contracts increased this week, up 5.0% on average.
  • Summer 23 and winter 23 expanded 9.7% and 7.7% respectively, rising to £277.00/MWh and £315.00/MWh.

Seasonal baseload power curve

  • Most seasonal peak power contracts also experienced gains this week, up 6.6% on average.
  • Summer 23 and winter 23 peak power increased 7.1% and 6.0% respectively, rising to £316.25/MWh and £404.25/MWh.

Commodity price movements

Oil and coal

  • Brent crude prices fell week-on-week, down 6.4% to average $86.85/bl, a second consecutive week of price decreases
  • Uncertainty in global commodity markets continue to exacerbate volatility in price, particularly evident over recent months
  • For this week more specifically, brent crude prices were hit with significant losses early in the week, as reports emerged that OPEC+ nations were considering supply increases, after production was cut by 2mn bpd the organisation last month

Carbon (UK and EU ETS)

  • EU and UK ETS prices saw mixed price movements this week. EU ETS climbed 2.7% to average €75.92/t, whereas UK ETS carbon decreased 1.0% to £68.16/t
  • EU ETS prices were supported this week by forecasts of colder upcoming temperatures on the continent, acting to encourage demand for gas and fossil fuel-fired assets

Wholesale price snapshot – Friday-on Friday

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