Energy Wholesale Market Review, 16 October 2020

• 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

• 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 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.

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