Energy Wholesale Market Review, 14 August 2020

• Day-ahead power rose 8.1% to £37.25/MWh as fluctuating wind generation saw volatility in the contract throughout the week.
• September 20 power slipped 6.8% to £36.35/MWh and October 20 power decreased 2.6% to £38.00/MWh.

• Q420 power moved 2.0% lower to £44.10/MWh.
• The annual October 20 contract lost 2.1% to £43.13/MWh, 16.4% lower than the same time last year (£51.59/MWh).

Forward curve comparison

Annual October Contract

• Day-ahead peak power was up 3.9% to £40.00/MWh following its baseload counterpart higher.
• September 20 peak power declined 2.2% to £41.48/MWh, and October 20 peak power increased 3.5% to £44.7/MWh.

• The annual October 20 peak power contract lost 0.2% to £49.27/MWh.
• This is 14.7% lower than the same time last year (57.73/MWh).

Forward curve comparison

Annual October contract

Seasonal baseload power contracts

Seasonal baseload power curve

• All seasonal power contracts declined last week, down on average by 2.0%.
• Winter 20 power decreased 2.0% to £46.15/MWh, while summer 21 fell 2.2% to £40.1/MWh.

• Most seasonal peak power contracts declined this week, down 0.7% on average.
• Winter 20 gas increased 0.3% to £53.96/MWh, while summer 21 peak power dropped 0.7% to £44.58/MWh.

Oil and Coal

Carbon

• Brent crude oil prices rose by 1.7% to average $45.07/bl this week, continuing last week’s trend.
• Prices were weighed upon this week by rising fears of market oversupply, following the decision by OPEC+ producers to ease production cuts at the start of August.
• Both the IEA and OPEC this week cut their 2020 demand forecasts for oil, indicating a weakening outlook for the coming months.
• The Brent price was supported mid-week, with the EIA reporting another weekly decline in US crude inventory levels.
• The continued decline in US oil stock indicates rising consumption in the country, despite the rising number of COVID-19 cases being reported.

• API 2 coal dropped 3.9% this week to average $57.54/t.
• Spain announced this week that an additional 1.2GW of coal generational capacity would be closed by 2022.
• The EU ETS price reversed the previous week’s gains, falling 1.3% to average €26.17/t, as a result of weaker demand at EUA auctions.
• The markets were cautious over the number of future EUA’s in circulation at auctions.
• With supply having been reduced so far in August, full-sized auctions are set to resume in the Autumn, which will likely weigh on prices.

Wholesale price snapshot