Energy Wholesale Market Review, 12 October 2018

Baseload electricity

• Day-ahead power fell 3.5% to end the week at £63.9/MWh. Prices dropped to a three-week low of £61.4/MWh on 11 October as high wind generation was forecast the following day.
• November and December 18 power decreased 4.6% and 3.8% to £67.3/MWh and £68.3/MWh, respectively.

• Annual April 19 power decreased 6.2% to £60.7/MWh.
• The contract is £1.1/MWh (1.7%) lower than the same period last month, and 41.0% above the same time last year when it was £43.0/MWh.

Forward curve comparison

Annual October Contract

Peak electricity

• Day-ahead peak power continued to decline, dropping 3.0% week-on-week to £68.0/MWh. This was £4.1/MWh above its baseload counterpart.
• Month-ahead peak power went down 4.2% to end the week at £75.0/MWh, £7.7/MWh above its baseload counterpart.

• Week-on-week, annual April 19 peak power went down 6.1% to £66.5/MWh. The contract is £5.8/MWh above its baseload power counterpart.
• The contract was 1.5% below its price last month (£69.3/MWh) and 35.3% higher than its value last year (£49.1/MWh).

Forward curve comparison

Annual October Contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

• Seasonal contracts were down 6.5% on average.
• Summer 19 power fell 6.5% to £58.0/MWh, falling to a seven-week low of £57.5/MWh on 11 October.
• Winter 19 power was down 5.9% to £63.4/MWh.

• All seasonal peak power contracts decreased this week, down 6.0% on average.
• Prices followed a decrease in gas prices, with seasonal gas prices down 7.7% on average.

Commodity price movements

Oil and Coal

Carbon

• Brent crude oil fell for the first time in two months, dropping 1.9% to average $83.1/bl this week.
• Prices dropped after the US announced it would discuss potential waivers for Iranian imports.
• Brent crude oil fell below $80.5/bl on 12 October, as the US stock market fell for a sixth consecutive day amid a slowdown in the global economy and the US-China trade dispute.
• OPEC’s Secretary-General announced that the group believe the oil market is well supplied and voiced concerns of potential oversupply in 2019.
• API 2 coal fell for the first time in 10-weeks, down 2.7% to average $96.7/t this week.
• Coal prices hit a five-week low of $94.0/t on 11 October.

• EU ETS carbon prices fell 2.6% to average €20.6/t.
• Prices plummeted to their lowest since 20 August, dropping to €18.3/t on 11 October.
• Temperatures across Europe were above seasonal normal levels reducing power demand and supplies from thermal generation.
• News of a German court’s ruling that power generator RWE must stop tree clearing operations at Hambach forecast, has reduced demand for EUA permits as it affects operations at two of the company’s major lignite-fired power plants.
• Although the future of the UK’s carbon pricing policy is uncertain post-Brexit, the European Council is due to meet on 18-19 October, and could provide a clearer picture for Brexit plants.

Wholesale price snapshot