Energy Wholesale Market Review, 16 July 2021

• Day-ahead power declined 4.9% to £92.25/MWh, falling from record highs the week prior, primarily driven by periods of increased wind output and taking direction from losses in gas markets on the near-curve.
• August 21 power slipped 1.3% at £88.75/MWh and September 21 power decreased 2.3% to £89.85/MWh.

• Q421 power moved 3.0% lower to £95.75/MWh.
• The annual October 21 contract lost 3.5% to £78.76/MWh, 65.3% higher than the same time last year (£47.64/MWh).

Forward curve comparison

Annual April Contract

• Day-ahead peak power was down 5.4% to £98.70/MWh, following its baseload counterpart lower.
• August 21 peak power declined 0.1% at £88.8/MWh, and September 21 peak power decreased 1.4% to £93.65/MWh.

• The annual October 21 peak power lost 3.6% to £86.53/MWh.
• This is 63.4% lower than the same time last year (52.96/MWh).

Forward curve comparison

Annual April contract

Seasonal baseload power contracts

Seasonal baseload power curve

• All seasonal power contracts declined this week, down on average by 3.1%.
• Winter 21 power decreased 3.8% to £94.77/MWh, while summer 22 fell 3.1% to £62.75/MWh.

• Most seasonal peak power contracts grew this week, up 2.0% on average.
• Winter 21 gas dropped 1.1% to £103.85/MWh, while summer 22 peak power increased 11.6% to £69.20/MWh.

Oil and Coal

Carbon

• Brent crude oil fell 0.8% to average $74.87/bl this week.
• A combination of bearish factors contributed to the downward price movement in the Brent crude oil price across this week.
• Initially, prices suffered amid reports demand growth has been slowing in recent weeks, perhaps driven by concerns over emerging COVID-19 variants.
• Similarly, expectations of increased supply following Saudi Arabia and the UAE reaching a compromise deal on Wednesday, which would add further supply into an already relatively supply dominated market.

• It was a second consecutive week of bearish price movements across both UK and European carbon markets. The EU ETS lost 4.2% to €52.82/t, with the UK ETS falling 4.4% to £43.63/t. Whilst prices across both the UK and EU ETS fell, prices are still high by comparison to prices earlier this year.
• Prices this week took direction from wider commodity markets. Lowering gas prices, weaker Brent crude prices and cooler than expected temperatures, all of which provided downward pressure on carbon prices. However, delays in issuing free EUA allocation by Germany and Poland curbed any sustained price losses.

Wholesale price snapshot