Energy Wholesale Market Review, 11 September 2020

Headlines

Most power and gas contracts fell this week, with day-ahead power contracts being the exception to this trend. Day-ahead gas fell 7.4% to 27.60p/th, from the eight-month high seen last week, with increased renewables and nuclear output seeing lower gas consumption for power generation. Day-ahead power rose 12.2% to £48.25/MWh, driven by forecasts of lower wind output for the start of next week. October 20 gas saw a notable drop and was down 10.1% to 27.89p/th. Most seasonal gas contracts followed oil prices lower this week, down by 3.0% on average, with the winter 20 contact dropping 5.4% to 36.93p/th. Seasonal power contracts slipped 0.9% on average, as prices were weighed on lower gas and EU ETS carbon prices. Winter 20 power decreased 1.4% to £50.40/MWh. International commodities saw collective downward movements this week. Brent crude oil prices declined by over 9% to average $40.81/bl, representing lows not experienced since mid-June. Similarly, the EU ETS carbon price dropped amid increased auction volumes, averaging €27.27/t.

Baseload electricity
  • Day-ahead power rose 12.2% to end the week at £48.25/MWh, driven higher by forecasts of lower wind output going into next week.
  • October 20 power slipped 4.7% at £42.20/MWh and November 20 power decreased 6.0% to £51.61/MWh.
  • Q420 power moved 3.0% lower to £48.49/MWh.
  • The annual October 20 contract lost 1.8% to £46.75/MWh, 8.9% lower than the same time last year (£51.33/MWh).

Forward curve comparison

Baseload electricity Forward curve comparison 11 September 2020

Annual October Contract

Baseload electricity Annual October contract 11 September 2020

Peak electricity
  • Day-ahead peak power was up 8.5% to £52.10/MWh, following in line with higher demand this week and as day-light hours begin to reduce.
  • October 20 peak power declined 2.3% to £49.15/MWh, and November 20 peak power decreased 2.5% to £60.53/MWh.
  • The annual October 20 peak power contract lost 1.4% to £53.03/MWh.
  • This is 8.2% lower than the same time last year (£57.79/MWh).

Forward curve comparison

Peak electricity Forward curve comparison 11 September 2020

Annual October contract

Peak electricity Annual October contract 11 September 2020

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 11 September 2020

Seasonal baseload power curve

Seasonal power prices Seasonal baseload power curve 11 September 2020

  • Most seasonal power contracts declined this week, down on average by 0.9%.
  • Winter 20 power decreased 1.4% to £50.40/MWh, while summer 21 fell 2.4% to £43.10/MWh.
  • Most seasonal peak power contracts declined this week, down 1.8% on average.
  • Winter 20 and summer 21 peak power dropped 1.2% and 1.8% respectively, falling to £58.53/MWh and £47.52/MWh.
Commodity price movements

Oil and Coal

Commodity price movements Oil and coal 11 September 2020

Carbon

Commodity price movements Carbon 11 September 2020

  • Brent crude oil prices have fallen significantly this week, seeing a 9.2% drop to average $40.81/bl – the lowest prices since mid-June 2020.
  • News continued to circulate this week about the threat of a second wave of Coronavirus, generating some uncertainty within the market. Rising levels of US crude inventory levels and onshore storage similarly weighed on prices with fears of market oversupply.
  • Compounding the issues arising from COVID-19 and market oversupply were price cuts announced by Saudi Arabia, with demand stuck below pre-COVID levels.
  • Following recent gains, EU ETS prices fell 4.5% to average €27.27/t this week.
  • The market experienced mixed movements this week, experiencing both weekly highs and subsequently falling amid a significant increase in auction volumes – increasing by more than 70%.
  • The increased auction volumes weighed on carbon prices as the market struggled to absorb the higher volume of EUA’s.
Wholesale price snapshot 

Wholesale price snapshot 11 September 2020

Posted by TEAM on 11 September 2020
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