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Energy Wholesale Market Review, 16 October 2020

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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		Annual October Contract
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		Annual October contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
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		Carbon
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