Energy Wholesale Market Review, 19 October 2018

Baseload electricity

• Day-ahead power rose 0.8% to £64.4/MWh.
• Prices peaked at £66.9/MWh on 16 October as low wind generation was forecast the following day.
• November and December 18 power both gained 1.2% to £68.1/MWh and £69.1/MWh, respectively.

• Annual April 19 power decreased 0.4% to £60.4/MWh.
• The contract is £2.6/MWh (4.2%) lower than the same period last month, and 41.1% above the same time last year when it was £42.8/MWh.

Forward curve comparison

Annual October Contract

Peak electricity

• Day-ahead peak power increased 0.7% week-on-week to £68.5/MWh. This was £4.1/MWh above its baseload counterpart.
• Month-ahead peak power went up 1.1% to end the week at £75.8/MWh, £7.7/MWh above its baseload counterpart.

• Week-on-week, annual April 19 peak power went down 0.5% to £66.1/MWh. The contract is £5.7/MWh above its baseload power counterpart.
• The contract was 0.5% below its price last month (£69.1/MWh) and 35.5% higher than its value last year (£48.8/MWh).

Forward curve comparison

Annual October Contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

• Seasonal contracts were down 1.1% on average.
• Summer 19 power was an exception, rising 0.1% to £58.0/MWh.
• Winter 19 power was down 0.8% to £62.9/MWh.

• Most seasonal peak power contracts decreased this week, down 1.1% on average.
• Prices reversed an increase in gas prices, with seasonal gas prices up 0.3% on average.

Commodity price movements

Oil and Coal

Carbon

• The weekly average Brent crude oil price fell 3.3% to average $80.4/bl, down from $83.1/bl.
• Prices fell below $80.0/bl on 15 October as Saudi Arabia announced it would increase production in November, despite geopolitical tensions between it and the US creating some volatility.
• Prices have remained below $80.5/bl since 17 October following a larger than expected rise in US crude stocks the previous week.
• API 2 coal fell for the second week, down 0.2% to average $96.5/t this week.
• Although prices dropped to $95.3/t on 17 October, coal prices recovered to end the week up at $99.3/t as strong demand for coal in Europe continues.

• EU ETS carbon prices fell 7.3% to average €19.1/t, remaining below €20.0/t throughout the week.
• Prices dropped to a two-month low of €17.9/t on 16 October amid uncertainty over the effects of a no-deal Brexit on the EU ETS.
• Continued uncertainty over the UK’s carbon pricing policy post-Brexit, and forecasts of near seasonal normal temperatures could see carbon prices remain near $20.0/t.
• Reuters has revised its EUA price forecast, increasing the average price between 2019-30 up €1.0/t to €23.0/t, peaking at €25.0/t in 2020 as the Market Stability Reserve holds back 24% of the market surplus from auctions.

Wholesale price snapshot