Energy Wholesale Market Review, 1 February 2019

Baseload electricity

• Day-ahead power dropped 8.4% to a seven-month low of £54.5/MWh, following its gas counterpart lower.
• March and April 19 power contracts lost 7.5% and 5.5% respectively, to start February at £53.4/MWh and £52.7/MWh.

• Annual April 19 power declined 4.4% to £55.8/MWh.
• The contract is 5.5% below the same time last month when it was £59.1/MWh, but 30.3% above the same time last year when it was £42.9/MWh.

Forward curve comparison

Annual April Contract

Peak electricity

• Day-ahead peak power fell 5.6% to £61.1/MWh. This was £6.6/MWh above its baseload counterpart.
• Month-ahead (March) peak power went dropped 7.1% to end the week at £57.3/MWh, £3.9/MWh above its baseload counterpart.

• Week-on-week, annual April 19 peak power fell 4.1% to £61.2/MWh. The contract remains £5.4/MWh above its baseload power counterpart.
• The contract was 5.0% below its price last month (£64.5/MWh), but 28.7% higher than its value last year (£47.6/MWh).

Forward curve comparison

Annual April contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

• All seasonal baseload power contracts fell, dropping 3.3% on average from the previous week.
• Summer 19 power dropped 5.6% to £51.8/MWh, the lowest since August 2018. The contract is 7.6% below the same time last month (£56.0/MWh).

• All seasonal peak power contracts went down this week, falling 3.3% on average.
• The summer 19 peak contract saw the largest change, dropping 5.4% to £55.7/MWh, and £3.9/MWh below its baseload power counterpart.

Commodity price movements

Oil and Coal 

Carbon

• • Brent crude oil prices fell for the first time in five weeks, down 0.8% to average $61.2/bl.
  • Oil prices rose early in the week, following reports that the US would impose sanctions on Venezuela’s PDVSA oil company.
  • However, data released towards the end of the week showed weaker economic growth in China as factory activity fell by the most in three years, signifying weaker demand for oil.
  • A Reuters survey expects OPEC production down 890,000bpd in January from December 2018 levels.
  • API 2 coal prices slipped 1.4%, reversing the previous week’s gains and average $84.8/t.
  • Coal prices have fallen amid forecasts of milder temperatures in February across Europe and the continued weak demand in Asia.

• EU ETS carbon prices dropped for the first time in three weeks, down 7.9% to average €22.6/t.
• This week saw the return of German EUA auctions on 1 February, easing some of the tightness in the market from January.
• The German government has received recommendations by the coal commission to cancel a defined number of EUAs, with expectations that the government will withhold permits in Phase 4 (2021-30).
• The recommendation comes as the commission suggest a complete phase-out strategy of Germany’s 43GW of coal capacity by 2038 and should shield the EU ETS from supply-side pressure.

Wholesale price snapshot