Energy Wholesale Market Review, 11 December 2020

Headlines

Most power and gas contracts rose this week, with exceptions being in both day-ahead peak and baseload power contracts. Day-ahead gas rose marginally, lifting 0.1% to 42.55p/th, despite gradually increasing temperatures throughout the week, correlated with periods of system oversupply. Conversely, day-ahead power fell significantly, falling 59.0% to £45.15/MWh, reflecting a period of notably high prices from the week prior, following price spikes from tight supply margins and corelated low wind output. However the day-ahead baseload power contract was weighed upon by periods of increased wind generation and wavering demand throughout this week. All seasonal gas contracts rose this week, up by 4.4% on average, while both summer 21 and winter 21 gas increased 7.7% and 5.3% respectively, lifting to 35.91p/th and 44.37p/th. All seasonal power contracts boosted this week, up on average by 2.6%, as summer 21 and winter 21 expanded 4.6% and 3.5% respectively, rising to £46.50/MWh and £52.60/MWh. Brent crude oil climbed for the fifth consecutive week, lifting 2.7% higher from the previous week to average $49.26/bl. Oil prices continued to rally on COVID-19 vaccination developments, creating a more positive demand outlook whilst also supported by global equity markets. EU ETS carbon climbed for the fifth consecutive week in parallel, rising 2.8% to average €30.03/t this week. Prices broke the €30.00/t mark across 9th to 11th December. Carbon prices benefitted largely from EU leaders reaching a deal on more ambitious and robust emissions cuts.

Baseload electricity
  • Day-ahead power fell 59.0% to £45.15/MWh, following price spikes this week. Prices were predominately weighed upon by increased wind generation and wavering demand throughout this week.
  • January 21 power climbed 2.7% at £57/MWh and February 21 power increased 4.4% to £59.22/MWh.
  • Q121 power moved 1.3% higher to £54.8/MWh.
  • The annual April 21 contract rose 4.0% to £49.55/MWh, 7.7% higher than the same time last year (£46.01/MWh).

Forward curve comparison

Baseload electricity Forward curve comparison 11 December 2020

Annual April Contract

Baseload electricity Annual April contract 11 December 2020

Peak electricity
  • Day-ahead peak power was down 68.9% to £54.35/MWh, following its baseload counterpart lower.
  • January 21 peak power gained 6.2% at £68.02/MWh, and February 21 peak power increased 7.9% to £67.65/MWh.
  • The annual April 21 peak power lost 4.0% to £54.82/MWh.
  • This is 4.8% lower than the same time last year (52.3/MWh).

Forward curve comparison

Peak electricity Forward curve comparison 11 December 2020

 

Annual April contract

Peak electricity Annual April contract 11 December 2020

 

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 11 December 2020

Seasonal baseload power curve

Seasonal power prices Seasonal baseload power curve 11 December 2020

  • All seasonal power contracts boosted this week, up on average by 2.6%.
  • Summer 21 and winter 21 expanded 4.6% and 3.5% respectively, rising to £46.50/MWh and £52.60/MWh.
  • All seasonal peak power contracts boosted this week, up 3.6% on average.
  • Summer 21 and winter 21 peak power increased 4.2% and 3.8% respectively, falling to £50.25/MWh and £59.39/MWh.
Commodity price movements

Oil and Coal

Commodity price movements Oil and Coal 11 December 2020

Carbon

Commodity price movements Carbon 11 December 2020

  • Brent crude oil climbed for the fifth consecutive week, lifting 2.7% higher from the previous week to average $49.26/bl.
  • Oil prices continued to rally on COVID-19 vaccination developments, creating a more positive demand outlook whilst also supported by global equity markets.
  • The first roll-out of vaccinations, to the general public, have acted to ease markets fears with concerns over lack of demand post-COVID.
  • It is hoped a successful vaccination roll-out, will allow many countries to kick-start their economies and exit strict lockdown measures which has historically acted to stifle demand in many recent months.
  • API 2 coal gained 3.4% from the previous week to average $63.70/t.
  • EU ETS carbon climbed for the fifth consecutive week, rising 2.8% to average €30.03/t this week. Prices broke the €30.00/t mark across 9, 10 and 11 December.
  • Carbon prices benefitted largely from EU leaders reaching a deal on more ambitious and robust emissions cuts, aiming to reduce carbon emissions by 55% by 2030.
  • Carbon prices like many commodity markets continue to find support from positive COVID-19 vaccination developments and the roll-out of vaccinations to the general public, easing demand fears.
Wholesale price snapshot 

Wholesale price snapshot 11 December 2020

 

Posted by TEAM on 14 December 2020
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