Energy Wholesale Market Review – 17 February 2023

Headlines

It was a bearish week as nearly all power and gas contracts decreased across the week. March 23 baseload and peak power contracts representing the noteworthy outliers, however. Day-ahead gas fell 12.1% to 119.5p/th, following the continuation of warmer weather trends across the UK, easing demand – coupled with the resumption of higher levels of LNG imports to UK landing terminals. Day-ahead power dropped 14.6% to £119.5/MWh, mirroring the losses observed from the equivalent gas contract, and reflective of periods of heightened wind and renewable outturn. Subsequently, March 23 gas was down 8.2% at 122.7p/th, and April 23 gas decreased 8.7% to 123.2p/th. Elsewhere, all seasonal gas contracts declined this week, down by 5.3% on average. Summer 23 and winter 23 gas dropped 7.3% and 6.0% respectively, subsiding to 127.0p/th and 153.2p/th. Like gas, all seasonal power contracts declined this week, down on average by 4.5%, as summer 23 power decreased 5.5% to £137.0/MWh, while winter 23 fell 5.3% to £161.0/MWh.

Baseload electricity

Forward curve comparison

  • Day-ahead power fell 14.6% to £119.5/MWh, following the bearish movements of day-ahead gas prices and periods of higher wind outturn in the week.
  • March 23 power climbed 0.4% to £140.0/MWh and April 23 power decreased 5.6% to £134.0/MWh.

Annual October contract

  • Q223 power moved 5.8% lower to £133.7/MWh.
  • The annual April 23 contract lost 5.4% to £149/MWh, 24.2% higher than the same time last year (£120.0/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was down 2.3% to £147.2/MWh, following the downward movements from its baseload power counterpart.
  • However, March 23 peak power gained 1.0% to £154.7/MWh, while April 23 peak power decreased 1.3% to £155.2/MWh.

Annual April contract

  • The annual April 23 peak power rose 5.1% to £175.3/MWh.
  • This is 47.9% higher than the same time last year (£118.5/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • All tracked seasonal power contracts declined this week, down on average by 4.5%.
  • Summer 23 power decreased 5.5% to £137.0/MWh, while winter 23 fell 5.3% to £161.0/MWh.

Seasonal baseload power curve

  • Like baseload, all seasonal peak power contracts declined this week, down 4.6% on average.
  • Summer 23 and winter 23 peak power dropped 1.7% and 7.5% respectively, falling to £154.5/MWh and £196.2/MWh.

Commodity price movements

Oil and coal

  • Brent crude oil rose 1.3% on the previous week to average $84.84/bl.
  • Contrary to last week, brent crude saw bullish movements during the past seven days, with increased positive sentiment towards potential rising Chinese demand offsetting US inflation worries.
  • The complete ban on Russian refined products that came into force in the EU from 5 February, and the G7 price cap, saw Russia offer a response by cutting Russian oil output by 5% to the countries adhering to the price ceiling coming into force during March, and due to decreased supply, prices will be impacted.

Carbon (UK and EU ETS)

  • Both EU and UK ETS schemes saw their average price this week raise marginally with a 1.3% increase to EU ETS carbon (€93.75/t), and UK ETS carbon seeing a 0.1% growth (£82.80/t).
  • UK ETS carbon rose as a result of decreased projected wind power generation across the continent leading to increased reliance on fossil-fuelled forms of power generation to make up for the loss.
  • On Friday, EU ETS prices approached €100/t, reaching €97.15/t following the EU announcement that the 2023 ETS compliance deadline will remain 30 April.

Wholesale price snapshot – Friday-on Friday

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