Energy Wholesale Market Review, 2 August 2019

Baseload electricity

• The day-ahead contract continued higher, up 4.3% to £42.8/MWh. Prices were supported by periods of lower wind generation last week, whilst higher day-ahead gas prices also lifted prices.
• September and October 19 power were up 7.4% and 3.6% to £44.2/MWh and £46.6/MWh respectively.

• Annual October 19 power increased by 0.6% week-on-week to £53.7/MWh.
• The contract is 5.7% higher than the same time last month (£50.8/MWh), and 1.8% above the same time last year (£52.7/MWh).

Forward curve comparison

Annual October Contract

• Day-ahead peak power was up 6.6% to £46.0/MWh, £3.2/MWh above its baseload counterpart.
• Day-ahead peak power is 29.5% lower than the same time last year when it was £65.3/MWh.
• September and October 19 peak power increased 6.6% and 3.4% to £47.3/MWh and £51.3/MWh respectively.

• Annual October 19 peak power was 0.2% higher at £59.1/MWh, remaining £5.4/MWh above its baseload power counterpart.
• The contract is 5.1% above its value this time last month (£56.3/MWh), and 0.5% higher than the same time last year when it was £58.9/MWh.

Forward curve comparison

Annual October contract

Seasonal baseload power contracts

Seasonal baseload power curve

• Seasonal baseload power contracts reversed the previous week’s losses, rising 1.0% on average.
• Winter 19 power gained 0.5% to £56.7/MWh.
• Summer 20 power was 0.7% higher at £50.7/MWh.

• Seasonal peak power contracts also reversed the previous week’s decline, up by 1.1% on average.
• Winter 19 peak power rose 0.3% to £63.3/MWh.

Oil and Coal

Carbon

• Brent crude oil was up just 0.2% to average $63.9/bl.
• Oil prices rose above $65.0/bl on 31 July following news of another weekly decline in US crude stocks, dropping 8.5mn barrels the previous week.
• However, prices dropped to $60.1/bl on 1 August following a statement from US President Donald Trump that he would impose a 10% tariff on an additional $300bn of Chinese goods after another round of unsuccessful trade talks ended on 31 July.
• API 2 coal prices reversed the previous week’s gains, dropping 2.9% to average $68.1/t.
• Coal prices have been pressured by weaker demand following the end of the previous week’s heatwave, which saw a pickup in conventional plant generation amid higher demand and a drop in wind and nuclear generation.

• EU ETS carbon prices averaged €28.7/t, down 1.7% from the previous week.
• Carbon prices fell following the end of the previous week’s heatwave which saw a pickup in conventional power generation, and therefore resulted in higher demand for EUAs. Despite the weekly average decline, carbon ended the week above €29/t, as auction volumes halved this month.
• Brexit remains a concern for market participants, with some traders expecting a no-deal Brexit to wipe €10/t off the current price of EUAs. With the UK parliament currently in recess until 3 September, Brexit will likely not be a key influence in the price of carbon this month.

Wholesale price snaphot