This week saw the introduction of some more bullish pricing sentiment, after what has represented a largely suppressed wholesale pricing environment in the opening two months of 2023. Elevated near-term gas contracts this week set a lot of the bullish sentiment for upward trending wholesale prices in the week, and in turn, prompted power to follow suit. Recognising these price rises, day-ahead gas rose 13.0% to 135.0p/th, amid the introduction of colder weather promoting higher heating demand, coupled with unplanned outages on Friday over the UK Continental Shelf, squeezing supply. Day-ahead power rose 22.6% to £146.5/MWh, mirroring trends shown from its equivalent gas contract. Subsequently, March 23 gas was up 7.5% at 132.0p/th, and April 23 gas increased 4.9% to 129.2p/th. Elsewhere, most seasonal gas contracts boosted this week, up by 1.0% on average, with both summer 23 and winter 23 gas increasing 3.5% and 0.8% respectively, lifting to 131.5p/th and 154.5p/th. On the contrary, most seasonal power contracts declined this week, with summer 24 and winter 24 retracting 3.6% and 1.3% respectively, falling to £132.0/MWh and £155.0/MWh.
Forward curve comparison
- Day-ahead power rose 22.6% to £146.5/MWh, following lowering gas prices higher and reduced baseload generation seen during the week, with a significant proportion of the GB nuclear fleet running at reduced capacity.
- March 23 power remained unchanged at £140.0/MWh whereas April 23 power increased 1.5% to £136.0/MWh.
Annual October contract
- Q223 power moved 3.2% higher to £138.0/MWh.
- The annual April 23 contract rose 1.7% to £151.5/MWh, 6.3% higher than the same time last year (£142.5/MWh).
Forward curve comparison
- Day-ahead peak power was up 5.6% to £155.5/MWh, following its baseload counterpart higher.
- March 23 peak power declined 2.4% to £151.0/MWh, and April 23 peak power decreased 4.7% to £148.0/MWh.
Annual April contract
- The annual April 23 peak power rose 3.1% to £170.0/MWh.
- This is 18.9% higher than the same time last year (£143.0/MWh).
Seasonal power prices
Seasonal baseload power contracts
- Most tracked seasonal power contracts declined this week, down on average by 0.4%.
- Summer 24 and winter 24 power retracted 3.6% and 1.3% respectively, falling to £132.0/MWh and £155.0/MWh.
Seasonal baseload power curve
- All seasonal peak power contracts declined this week, down 3.0% on average.
- Summer 23 and winter 23 peak power dropped 2.9% and 3.2% respectively, falling to £150.0/MWh and £190.0/MWh.
Commodity price movements
Oil and coal
- Brent crude oil fell 2.6% on the previous week to average $82.63/bl.
- We continue to observe periods of volatility for Brent crude prices.
- Prices throughout much of the start of 2023 have been supressed as Chinese demand remains low, noting China are one of the largest crude consumers globally.
- However, any significant losses this week were held back by decreasing Russian export volumes – a response to western imposed price caps.
Carbon (UK and EU ETS)
- Both EU and UK ETS schemes saw their average price this week rise, with a 4.7% increase to EU ETS carbon (€98.18/t), and UK ETS carbon seeing a 0.8% growth (£83.43/t).
- Additionally, on 21 February EU ETS prices tipped over €100.0/t, to €101.0/t for the first time, in what marked a landmark event for the scheme. It is thought that the current system in Europe now makes it more onerous for polluters and that higher carbon prices are increasingly pushing generators towards other emergent technologies like carbon capture and storage.
- Elsewhere, UK ETS prices for much of February to date have been relatively consistent.