Energy Wholesale Market Review, 18 January 2019

Baseload electricity

• Day-ahead power rose 3.1% week-on-week to £64.4/MWh, amid tight supply margins following several nuclear outages and forecasts of lower wind generation.
• February and March 19 power contracts gained 5.5% and 4.3% to £64.9/MWh and £62.2/MWh respectively.

• Annual April 19 power gained 4.5% to £60.4/MWh.
• The contract is 2.9% below the same time last month when it was £62.2/MWh and 36.7% above the same time last year when it was £44.2/MWh.

Forward curve comparison

Annual April Contract

Peak electricity

• Day-ahead peak power rose 3.9% to £72.5/MWh. This was £8.1/MWh above its baseload counterpart.
• Month-ahead peak power went up 5.1% to end the week at £71.1/MWh, remaining £6.2/MWh above its baseload counterpart.

• Week-on-week, annual April 19 peak power rose 4.2% to £65.8/MWh. The contract was £5.4/MWh above its baseload power counterpart.
• The contract was 3.0% below its price last month (£67.8/MWh) and 33.2% higher than its value last year (£49.4/MWh).

Forward curve comparison

Annual April contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

• All seasonal contracts rose, up 3.8% on average.
• Both summer 19 and summer 20 power went up 4.7% to £57.2/MWh and £53.2/MWh respectively.

• All seasonal peak power contracts went up this week, recovering the previous week’s decline.
• Seasonal peak contracts went up 3.5% on average.
• The summer 19 contract saw the largest change, gaining 4.6% to £61.0/MWh.

Commodity price movements

Oil and Coal 

Carbon

• • Brent crude oil prices rose for the second consecutive week, up 1.2% to average $60.6/bl.
  • Prices have risen as data showed OPEC’s production cuts coming into effect, despite news that US crude production hit a record 11.9mn bpd the previous week, up from 11.7mn bpd.
  • This week, HSBC lowered its 2019 Brent crude oil price forecast by 20% to $64/bl. The bank has cited strong growth in US oil supplies and uncertainties over global oil demand amid slower than expected economic growth.
  • API 2 coal prices went up for the first time in three weeks, increased 2.9% to average $84.6/t.
  • Coal prices have been supported by colder temperatures across Europe, increasing demand for coal.

• EU ETS carbon prices recovered from last week’s decline, rising 3.8% to average €23.2/t.
• Within-day carbon prices reached a high of €24.7/t on 18 January, the highest since 3 January.
• This week, a survey of analysts by Reuters revealed an increase in EU ETS carbon price forecasts, with EUAs expected to average €27.0/t in 2019 and €32.8/t in 2020, before dropping to €27.3/t in 2021.
• Following this week’s defeat of Brexit plans, the UK PM Theresa May will present a new/changed proposal for Brexit to Parliament on 21 January, which may bring further insight to plans for the UK’s carbon tax beyond 29 March.

Wholesale price snapshot