Energy Wholesale Market Review – 15 September 2023

Headlines

It was a largely bearish week for gas and power contracts this week, continuing the trend of decreasing wholesale prices observed across much of 2023. Day-ahead gas fell 1.9% to 85.35p/th, following periods of above-average temperature during the week. However, losses were limited by extended maintenance works across the Norwegian Continental Shelf, limiting flows into GB from Norway. Likewise, day-ahead power dropped 12.5% to £80.50/MWh, taking direction from losses made in near-term gas markets and increased wind output during the week – loosening system margins. October 23 gas was down 1.7% at 87.25p/th, and November 23 gas decreased 3.2% to 108.90p/th. Most seasonal gas contracts fell this week too, down by 1.7% on average, with winter 25 the exception – seeing a 0.4% gain. Winter 23 and summer 24 gas dropped 2.0% and 1.9% respectively, subsiding to 121.50p/th and 126.00p/th.  All seasonal power contracts traded lower this week, down on average by 1.9%. Winter 23 and summer 24 power went down 2.4% and 2.7% respectively, falling to £111.75/MWh and £108.00/MWh. Brent crude oil reached a 10 month high this week, following OPEC+ supply cuts anticipated to last until the end of the year. Subsequently, prices were 3.0% higher at $93.90/bl. Meanwhile, UK ETS prices dropped to the lowest level since the scheme opened in May 2021, at £38.75/t.

Baseload electricity

Forward curve comparison

  • Day-ahead power fell 12.5% to £80.50/MWh, following its gas counterpart, with further losses supported by a spike in forecast wind outturn, loosening system margins.
  • October 23 power slipped 3.8% at £82.75/MWh and November 23 power decreased 4.2% to £103.50/MWh.

Annual October contract

  • Q423 power moved 2.9% lower to £101.00/MWh.
  • The annual October 23 contract lost 2.5% to £109.88/MWh, 64.0% lower than the same time last year (£305.00/MWh)

Peak electricity

Forward curve comparison

  • Day-ahead peak power was down 9.2% to £76.25/MWh, following its baseload counterpart lower.
  • However, October 23 peak power gained 4.8% at £95.18/MWh, and November 23 peak power increased 2.0% to £129.58/MWh.

Annual October contract

  • The annual October 23 peak power fell 1.4% to £125.00/MWh
  • This is 71.7% lower than the same time last year (442.25/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • All seasonal power contracts declined this week, down on average by 1.9%.
  • Winter 23 power decreased 2.4% to £111.75/MWh, while summer 24 fell 2.7% to £108.00/MWh.

Seasonal peak power curve

  • All Seasonal peak power contracts declined this week, down 1.4% on average.
  • Winter 23 and summer 24 peak power dropped 0.9% and 1.9% respectively, falling to £134.74/MWh and £115.25/MWh.

Commodity price movements

Oil and coal

  • Brent crude reached a 10-month high of $93.90/bl on 15 September with multiple bullish factors impacting the commodity.
  • Brent crude continued to register a week-on-week gains, up 3.0% to $92.07/bl this week, following extensions to output cuts by Saudi Arabia and Russia, acting to tighten global supply.
  • Similarly, reports of a boost in Chinese industrial demand further strengthened the bullish sentiment.
  • Chinese economic growth is set to resurge according to some economists as the year progresses, further tightening the global supply/demand balance.
  • Similarly, OPEC+ output cuts, anticipated to last until 2024, and growing tensions between Russia and Ukraine – with the potential to threaten Russian oil shipments, provide a bullish pricing landscape into the future.

Carbon (UK and EU ETS)

  • As the disparity between scheme prices remains at an all-time high, due to recent policy adjustments across both schemes, the UK ETS experienced its lowest price since the scheme opened in May 2021
  • UK ETS prices fell to a record low of £38.75/t on 15 September, averaging £39.82/t across the week, representing an 8.8% drop. Drivers of decline were formed from a large drop in carbon-intensive power generation and lowering demand from industry.
  • Similarly, EU ETS carbon saw its lowest value in three months, with prices dropping to €81.33/t on 12 September, while registering a 2.2% drop to average €82.25/t.
  • Carbon prices across both the EU and UK ETS schemes are likely to remain volatile; given the level of unpredictability attached to gas supply into Europe for the remainder of 2023 and into 2024.

Wholesale price snapshot – Friday-on Friday

Power to make change

We believe that people power can change the world. We are here to help you have a positive impact on the planet. Together we can make a difference.

Take the next step

Becoming Net Zero

Leading by example, we became carbon neutral in 2023 and are committed to achieving net zero business emissions by 2030.

Read our strategy

Employee Ownership

As an Employee Ownership Trust we embrace the three pillars of good communication, governance and leadership, putting our people first.

Learn more about us

We will be by your side

Staying at the forefront of industry, we embrace and drive change, delivering solutions at pace and scale to meet the modern challenges of energy and sustainability.

Meet our people