Energy Wholesale Market Review, 12 July 2019

Baseload electricity

• The day-ahead contract was 14.6% higher at £46.6/MWh, a two-week high. Day-ahead power is 19.0% lower than the same time last year (£57.5/MWh).
• August and September 19 power were up 17.2% and 11.8% to £44.6/MWh and £46.4/MWh respectively.

• Annual October 19 power gained 10.6% week-on-week to £56.2/MWh.
• The contract is 8.9% higher than the same time last month (£51.6/MWh), and 9.0% above the same time last year (£51.5/MWh).

Forward curve comparison

Annual October Contract

• Day-ahead peak power gained 12.8% to £50.5/MWh, £3.9/MWh above its baseload counterpart.
• Day-ahead peak power is 18.9% lower than the same time last year when it was £62.3/MWh.
• August and September 19 peak power rose 15.8% and 11.4% to £47.6/MWh and £49.6/MWh respectively.

• Annual October 19 peak power was up 9.3% to £61.5/MWh, £5.3/MWh above its baseload power counterpart.
• The contract is 6.8% above its value this time last month (£57.6/MWh), and 6.6% higher than the same time last year when it was £57.7/MWh.

Forward curve comparison

Annual October contract

Seasonal baseload power contracts

Seasonal baseload power curve

• On average, seasonal baseload power contracts were up 7.6%, mirroring their gas counterparts.
• Winter 19 power rose 10.7% to £59.7/MWh, the highest since the end of April 2019.
• Summer 20 power was up 10.5% to £52.6/MWh.

• Seasonal peak power contracts gained 7.2% on average.
• Winter 19 peak power was 10.0% higher at £66.1/MWh, £6.4/MWh below its baseload counterpart.

Oil and Coal

Carbon

• Brent crude oil rose 2.0% to average $65.7/bl. Prices hit $67.6/bl on 11 July, the highest since 30 May.
• Oil prices were supported by news of a 9.5mn barrel decline in US crude stocks the previous week, while a potential hurricane led to deep sea wells and production platforms in the Gulf of Mexico being evacuated.
• Rising tensions in the Middle East involving Iran and threats to block the Strait of Hormuz will add to support from OPEC’s recent decision to extend production cuts into 2020.
• API 2 coal prices gained 5.1% to average $68.2/t, reaching a near nine-week high of $69.1/t on 11 July.
• Coal prices have followed a recovery in oil and a rise in demand in Asia due to summer cooling season.

• EU ETS carbon prices went above €28/t for the first time since April 2008. Prices averaged €27.4/t, up 3.2% from the previous week.
• On the continent, unplanned outages and maintenance resulted in around a third of France’s nuclear fleet being offline due to warmer river temperatures and lower water levels.
• This, combined with weak wind generation across Europe, has led to more carbon intensive plant running, and therefore greater demand for EUAs.
• Comments from nominated European Commission President Ursula von der Leyen promised to introduce legislation within her first 100 days in office to extend the bloc’s emissions cut target from 40% to 50% by 2030. This tougher target equals a tighter emissions cap and would see tighter EUA supplies.

Wholesale price snaphot