Energy Wholesale Market Review – 2 February 2024


Most wholesale gas and power contracts experienced week-on-week gains this week. However, we continue to observe subdued wholesale energy prices compared to the year previous. Day-ahead gas rose 5.1% to 69.25p/th, despite above-average temperature forecasts in tandem with strong flows from the Norwegian Continental Shelf providing greater supply security to GB. Opposing this, day-ahead power fell 20.1% to £53.50/MWh, with losses driven further by forecasts of higher wind generation and lower demand, acting to decrease reliance on gas-fired assets. However, March 24 gas was up 7.0% at 70.70p/th, and April 24 gas increased 3.3% to 71.30p/th. Similarly, all seasonal gas contracts increased this week, up by 2.9% on average, with both summer 24 and winter 24 gas dropping 4.9% and 2.2% respectively, rising to 72.50p/th and 88.80p/th. Like gas, all seasonal power contracts registered gains this week, up on average by 3.1%, as summer 24 power grew 5.0% to £66.50/MWh, and winter 24 rose 2.6% to £83.10/MWh.

Baseload electricity

Forward curve comparison

  • Day-ahead power fell 20.1% to £53.50/MWh, with losses driven by forecasts of higher wind generation for and lower demand for Monday, acting to decrease reliance on gas-fired assets
  • However, March 24 power climbed 7.7% at £66.50/MWh and April 24 power increased 4.4% to £66.00/MWh.

Annual October contract

  • Q224 power moved 5.6% higher to £66.00/MWh.
  • The annual April 24 contract rose 3.6% to £74.80/MWh, 53.7% lower than the same time last year (£161.50/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was down 20.0% at £72.40/MWh, following its baseload counterpart lower
  • Opposing this, March 24 peak power gained 5.4% at £72.3/MWh, and April 24 peak power increased 4.1% to £68.2/MWh.

Annual October contract

  • The annual April 24 peak power rose 2.0% to £83.55/MWh
  • However, this is 51.5% lower than the same time last year (172.25/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • All seasonal power contracts rose this week, up on average by 3.1%.
  • Summer 24 and winter 24 increased 5.0% and 2.6% respectively, rising to £66.50/MWh and £83.10/MWh.

Seasonal peak power curve

  • All seasonal peak power contracts saw gains this week, rising 2.2% on average.
  • Summer 24 and winter 24 peak power increased 3.1% and 1.3% respectively, rising to £69.85/MWh and £97.25/MWh.

Commodity price movements

Oil and coal

  • Continuing the trend of regaining value, brent crude saw bullish movements during the last week, rising 1.9% to average $81.68/bl, amid heightening tensions in the Middle East raising the possibility of supply disruption
  • Likewise, OPEC+ reiterated that it will maintain production cuts for the first quarter of 2024, further tightening the global market
  • However stronger gains were limited due to uncertainty surrounding growth across the Chinese property sector, acting to increase concerns surrounding crude oil demand across the country – in tandem with continued strong US production, acting to offset supply uncertainty
  • Brent crude prices will remain volatile, as they continue to be reactive to wider geo-political developments. Recent price drivers include U.S. crude inventory levels, Chinese economic recovery, and the war in the Middle East – factors which remain highly changeable and therefore introduce uncertainty to implications on commodity prices

Carbon (UK and EU ETS)

  • Both ETS schemes registered week-on-week losses across the reporting period as the EU ETS carbon price fell 0.4% to €63.15/t and the UK ETS carbon price dropped 1.5% to £34.06/t, with the bearish movements driven by mild winter temperatures, higher wind generation acting to reduce reliance on more expensive forms of power generation, and reduced industrial demand across both the UK and EU
  • As a result, UK ETS carbon fell to the lowest price recorded since the inception of the scheme in 2021, dropping to £32.30/t on 30 January
  • Carbon prices reaching an all-time low will weigh upon clean spark spreads and make thermal generation more economical, resulting in lower incentives for renewable generation assets
  • As the months warm up further, it can be expected that carbon prices will continue to fall, as lower heating demand reduces power demand in turn

Wholesale price snapshot – Friday-on Friday

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