Energy Wholesale Market Review, 10 May 2019

Baseload electricity

• Day-ahead power rose 9.1% to end the week at £46.8/MWh, a near one-month high amid forecasts of lower wind output and an uptick in gas prices.
• June and July 19 power were up 1.5% and 1.2% to £43.5/MWh and £43.7/MWh, respectively.

• Annual October 19 power increased 2.9% week-on-week to £53.7/MWh.
• The contract is 4.3% lower than the same time last month (£56.1/MWh), and 9.8% higher than the same time last year (£49.9/MWh).

Forward curve comparison

Annual April Contract

Peak electricity

• Day-ahead peak power rose 14.0% to £49.0/MWh, £2.2/MWh above its baseload counterpart.
• Day-ahead peak power is 13.3% lower than the same time last year when it was £56.5/MWh.
• June and July 19 peak power were up 1.6% and 1.2% at £47.5/MWh and £48.0/MWh, respectively.

• Annual October 19 peak power gained 2.8% to end the week at £59.5/MWh, £5.8/MWh above its baseload power counterpart.
• The contract is 3.6% below its value this time last month (£61.7/MWh), and 6.5% above the same time last year when it was £55.9/MWh.

Forward curve comparison

Annual April contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

• Seasonal power contracts rose 1.7% on average.
• Winter 19 and summer 20 contracts lifted 3.0% and 2.8% to £58.4/MWh and £49.1/MWh, respectively.
• Only winter 21 was lower week-on-week, slipping 0.5% to £54.1/MWh.

• Seasonal peak power contracts rose 2.3% on average, with winter 19 peak power up 2.7% at £65.5/MWh.
• On average, seasonal peak power contracts are 3.6% lower month-on-month.

Commodity price movements

Oil and Coal 

Carbon

• • Brent crude oil prices fell for a second consecutive week, down 1.8% to average $70.3/bl.
  • The US Energy Information Administration (EIA) released an updated price forecast for Brent crude oil this week, predicting Brent crude oil prices would average $69.6/bl in 2019 and $67.0/bl in 2020. The 2019 forecast is up 11% from the previous month due to predictions of a tighter than previously expected oil market this summer, as OPEC production in April fell to 30mn bpd, and is forecast to average 30.3mn bpd this year.
  • API 2 coal prices lifted slightly, up 0.4% to average $70.4/t. Coal prices started the week at $69.7/t but rose to $71.0/t on 9 May.
  • Coal prices have remained around $70/t for the past month, as demand across Europe remains relatively week due to the economic unattractiveness of coal compared to cheaper gas.

• EU ETS carbon prices reversed last week’s fall, rising 2.9% to average €26.5/t.
• Carbon prices rose towards €27/t early in the week, and peaked at $27.2/t on 9 May, a two-week high.
• EUAs found support from unseasonably cool weather across Europe, pushing up power and gas demand and conventional-fired power generation.
• The recovery in European gas contracts has also supported EUA buying, pushing up the price of carbon.

Wholesale price snapshot