03 June 2022

Headlines

Wholesale gas and power prices were relatively mixed throughout last week, with losses observed on day-ahead power contract and front month contracts more generally, with gains seen further out along the forward curve – a relatively consistent trend observed in recent weeks. Day-ahead gas rose 14.7% to 133.00p/th, following periods of stronger gas-for-power demand coupled with lower Norwegian gas flows into the UK during the week. Unlike its equivalent gas contract, day-ahead power fell 12.5% to £140.00/MWh, with periods of higher wind outturn coupled with lower trending demand heading into the Jubilee bank holiday. July 22 gas was up 3.2% at 166.54p/th, and August 22 gas increased 8.1% to 185.48p/th. Elsewhere, all seasonal gas contracts boosted last week, up by 5.3% on average, while both winter 22 and summer 23 gas increased 3.8% and 6.4% respectively, lifting to 241.50p/th and 182.00p/th. Like gas, all seasonal power contracts grew last week, up on average by 3.0%, as winter 22 and summer 23 expanded 5.1% and 2.8% respectively, rising to £247.50/MWh and £167.50/MWh.

Baseload electricity
  • Day-ahead power fell 12.5% to £140/MWh, following periods of higher wind outturn and lowering demand into the bank holiday weekend.
  • July 22 power slipped 0.3% at £174.5/MWh and August 22 power decreased 4.6% to £179/MWh.
  • Q322 power moved 0.6% higher to £192/MWh.
  • The annual October 22 contract rose 4.1% to £207.5/MWh, 248.3% higher than the same time last year (£59.58/MWh).
Forward Curve Comparison

Annual October Contract

Peak electricity
  • Day-ahead peak power was down 17.1% to £145.00/MWh, following its baseload counterpart lower.
  • July 22 peak power declined 4.3% at £180.05/MWh, and August 22 peak power decreased 8.2% to £186.45/MWh.
  • The annual October 22 peak power rose 2.6% to £253.5/MWh.
  • This is 264.9% higher than the same time last year (69.48/MWh).

Forward curve comparison

Annual October contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

  • All seasonal power contracts experienced gains last week, up on average by 3.0%.
  • Winter 22 and summer 23 contracts expanded 5.1% and 2.8% respectively, rising to £247.50/MWh and £167.50/MWh.
  • Most seasonal peak power contracts boosted last week, up 2.7% on average.
  • Winter 22 and summer 23 peak power contracts increased 1.6% and 4.1% respectively, rising to £308.60/MWh and £198.40/MWh.
Commodity price movements

Oil and Coal

Carbon

  • Brent crude prices lifted 4.0% last week to average $119.26/bl.
  • The prospect of an EU-wide embargo on Russian oil continued to outweigh demand concerns last week.
  • The deal is thought to include carve-outs for member states most reliant on Russian oil, such as Hungary.
  • Similarly, the back-drop of a globally tightened brent crude market continues to provide a strong foundation of ongoing price support.
  • Elsewhere, reports that Chinese lockdown restrictions have begun to subside, eased future demand fears from what represents one of the largest oil consuming countries globally.
  • API 2 coal fell 2.0% to average $233.80/t.
  • Carbon markets saw bullish movements across both EU and UK ETS markets. The UK ETS gained 2.0% to average £82.72/t, while the EU ETS climbed 3.0% to average €84.54/t over the week.
  • Both the UK and EU ETS carbon markets remain sensitive to change, with uncertainty in the wider European energy landscape amid the Russian-Ukraine war causing a ripple effect into carbon markets.
  • From a bullish point of view last week, carbon prices mirrored most other global commodity markets which enjoyed a period of price growth. Similarly, we also observed a period of low auction supply, which lent support to prices across both the UK and ETS carbon markets.
Wholesale price snapshot 

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