Energy Wholesale Market Review, 15 July 2022

Headlines

Wholesale power contracts experienced mixed price movements this week, whereas all tracked gas contracts registered week-on-week price losses. Subsequently, day-ahead gas fell 8.3% to 203.50p/th, following periods of system oversupply amid stronger UKCS production – coupled with anticipated lower demand into the weeks end, driven by the forecast heatwave in the UK. Conversely, day-ahead power rose 17.5% to £335.00/MWh, upward price movement can be attributed to lower wind outturn during the week, and strong export to the continent. Unlike the day-ahead baseload power contract, the front seasonal power contracts fell – with August 22 power down 18.3% at £245.00/MWh, and September 22 power decreasing 8.3% to £330.00/MWh. Elsewhere, most gas contracts declined this week, down by 5.7% on average, while both winter 22 and summer 23 gas dropped 7.1% and 9.6% respectively, subsiding to 423.20p/th and 284.80p/th. Similar downward price movements were seen across most seasonal power contracts, falling on average by 1.1%, with summer 23 down 7.5% to £245.00/MWh and the winter 23 contract dropping 3.1% to £264.00/MWh.

Baseload electricity
  • Day-ahead power rose 17.5% to £335.00/MWh, attributed to lower wind outturn and continued high exports to the continent during the week.
  • August 22 power slipped 18.3% at £245.00/MWh and September 22 power decreased 8.3% to £330.00/MWh.
  • The annual October 22 contract rose 1.9% to £344.00/MWh, 467.7% higher than the same time last year (£60.6/MWh).
Forward Curve Comparison

 

Annual October Contract

Peak electricity
  • Day-ahead peak power was up 37.3% to £405.00/MWh, following baseload power higher.
  • August 22 peak power gained 6.0% at £285.25/MWh, and September 22 peak power decreased 0.2% to £364.25/MWh.
  • The annual October 22 peak power rose 8.3% to £419.5/MWh
  • This is 501.6% higher than the same time last year (69.73/MWh).

Forward curve comparison

 

Annual October contract

 

Seasonal power prices

Seasonal baseload power contracts

 

Seasonal baseload power curve

 

 

  • Most seasonal power contracts declined this week, down on average by 1.1%.
  • Summer 23 fell 7.5% to £245.00/MWh and the winter 23 contract dropped 3.1% to £264.00/MWh.
  • Some seasonal peak power contracts boosted this week, up 3.9% on average.
  • Winter 22 gas increased 14.1% to £561.25/MWh, whereas summer 23 peak power dropped 1.9% to £277.75/MWh.
Commodity price movements
 

Oil and Coal

 

Carbon

  • Brent crude prices fell 4.9% this week to average $101.38/bl, a second consecutive week of price decline.
  • Primarily, concerns within oil markets at the prospect of an impending global recession weighed on prices strongly again this week.
  • It is feared that should a global recession take a firm hold, global demand for commodities such as oil will fall weighing on prices as a result.
  • Elsewhere, later in the week, reports that the US federal reserve is looking into the possibility of raising interest rates to combat inflation compounded week-on-week average losses for Brent crude this week.
  • API 2 coal rose 8.9% to average $286.20/t
  • The EU and UK ETS experienced conflicting price movements this week. The EU ETS climbed 1.0% to average €84.58/t whilst the UK ETS fell, down 2.2% to average £81.91/t.
  • For the EU ETS, in-line with significant rises in temperature, we observed increased cooling demand across western-Europe – raising the level of demand for A/C cooling, driving demand higher for fossil fuel generation in turn.
  • UK ETS prices on the other hand, were weighed upon by periods of higher wind and solar outturn in the week, placing less reliance on fossil fuels.
Wholesale price snapshot 

 

Posted by TEAM on 15 July 2022