Energy Wholesale Market Review, 16 October 2020

Headlines

Power contracts experienced mixed price movements throughout this week. Day-ahead power decreased 5.7% to £45.80/MWh, owing to strong renewables output forecast for the start of next week. This was despite high prices observed mid-week amid news of tight supply margins and numerous generator outages. The month-ahead contract (November 20) gained 0.1% to £49.90/MWh. In contrast, summer 21 power moved 1.3% lower to £43.45/MWh, with winter 21 also decreasing 1.6% to £49.90/MWh. Similar to power contract movements, gas contracts varied widely throughout the week, with forward contracts experiencing support from the forecast cold snap across GB and Continental Europe. Day-ahead gas lifted 5.2% to 40.50p/th. November 20 gas rose 5.8% to 40.80p/th, with December 20 gas also rising 4.9% to 43.00p/th. Summer 21 gas lifted 0.4% to 34.90p/th but the winter 21 contract slipped 1.1% to 43.10p/th. Brent crude oil marginally rose this week, seeing an increase of 1.0% to average $42.28/bl. Despite the price growth this week, a general sentiment of uncertainty continues to circulate throughout the market as the threat of COVID-19 globally begins to intensify again. EU ETS prices fell this week, reversing the marginal increase in prices the previous week. Prices dropped by 5.4% to average €25.27/t for the week, following similar drivers to the oil market, as rising COVID-19 cases could dampen demand for EUAs this winter.

Baseload electricity
  • Day-ahead power fell 5.7% to £45.80/MWh, weighed on by forecasts of strong renewables output for the start of next week, but despite periods of tight supply margins experienced this week.
  • November 20 power climbed 0.1% to £49.90/MWh and December 20 power increased 0.8% to £51.15/MWh.
  • Q121 power moved 0.5% higher to £52.65/MWh.
  • The annual April 21 contract lost 1.4% to £46.68/MWh, 4.9% lower than the same time last year (£49.07/MWh).

Forward curve comparison

Baseload electricity Forward curve comparison 16 October 2020

Annual October Contract

Baseload electricity Annual April contract 16 October 2020

Peak electricity
  • Day-ahead peak power was up 3.5% to £48.65/MWh, countering trends observed by its baseload counterpart.
  • November 20 peak power declined 3.9% to £59.23/MWh, and December 20 peak power decreased 1.1% to £58.83/MWh.
  • The annual April 21 peak power contract lost 1.6% to £52.28/MWh.
  • This is 5.5% lower than the same time last year (55.34/MWh).

Forward curve comparison

Peak electricity Forward curve comparison 16 October 2020

Annual October contract

Peak electricity Annual April contract 16 October 2020

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 16 October 2020

Seasonal baseload power curve

Seasonal power prices Seasonal baseload power curve 16 October 2020

  • All seasonal power contracts declined this week, down on average by 1.8%.
  • Summer 21 power decreased 1.3% to £43.45/MWh, while winter 21 fell 1.6% to £49.90/MWh.
  • Most seasonal peak power contracts declined this week, down 1.8% on average.
  • Summer 21 and winter 21 peak power dropped 1.8% and 1.4% respectively, falling to £47.78/MWh and £56.78/MWh.
Commodity price movements

Oil and Coal

Commodity price movements Oil and coal 9 October 2020

Carbon

Commodity price movements Carbon 9 October 2020

  • Brent crude oil marginally rose this week, seeing an increase of 1.0% to average $42.28/bl.
  • Despite the price growth this week, a general sentiment of uncertainty continues to circulate throughout the market as the threat of COVID-19 globally begins to intensify again.
  • Many economies are imposing fresh lockdown restrictions to battle a resurgence in case numbers.
  • API 2 coal followed the previous week’s decline, slipping a further 1.8% to average $58.74/t for the week.
  • EU ETS prices fell this week, reversing the marginal increase in prices the previous week. Prices dropped by 5.4% to average €25.27/t for the week.
  • The drop in prices this week is symptomatic of the general sentiment observed across many global commodity markets, as the threat of COVID-19 begins to spiral out of control again. Prices observed in recent weeks have sat between €25-30/t, rising and falling with little consistency week on week.
  • Compounding this week’s decline is also a general concern of a ‘hard Brexit’ and implementation of a UK ETS scheme. No firm route forward has been agreed despite the 1 January back-stop date drawing closer.
Wholesale price snapshot 

Wholesale price snapshot 16 October 2020

 

Posted by TEAM on 19 October 2020
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