Energy Wholesale Market Review, 21 August 2020

• Day-ahead power rose 10.1% to £41.00/MWh following lower wind generation forecasts at the beginning of next week.
• September 20 power climbed 1.1% to £36.75/MWh and October 20 power increased 2.7% to £39.04/MWh.

• Q420 power moved 2.4% higher to £45.18/MWh.
• The annual October 20 contract rose 2.2% to £44.06/MWh, 13.2% lower than the same time last year (£50.77/MWh)

Forward curve comparison

Annual October Contract

• Day-ahead peak power was up 15.0% to £46.00/MWh, following its baseload counterpart higher.
• September 20 peak power gained 2.5% to £42.5/MWh, and October 20 peak power increased 4.8% to £46.85/MWh.
  

• The annual October 20 peak power contract lost 2.6% to £50.56/MWh.
• This is 11.6% lower than the same time last year (57.2/MWh).
  

Forward curve comparison

Annual October contract

Seasonal baseload power contracts

Seasonal baseload power curve

• All seasonal power contracts rose this week, up on average by 1.6%.
• Winter 20 and summer 21 climbed 2.1% and 2.3% respectively, rising to £47.10/MWh and £41.02/MWh.

• All seasonal peak power contracts increased this week, up 1.6% on average.
• Winter 20 and summer 21 peak power increased 2.8% and 2.4% respectively, rising to £55.48/MWh and £45.63/MWh.

Oil and Coal

Carbon

• Brent crude oil prices remained unchanged averaging just over $45.04/bl this week, amid the easing of lockdown restrictions with a slow COVID-19 recovery.
• Prices have plateaued signalling the end to a near five-month high with some major crude oil producers seeking to limit supply.
• Prices remain afflicted with fears of market oversupply and subsequently, some OPEC+ producers have held off increasing demand.
• Some OPEC+ members will likely need to cut output to combat recent issues of oversupply.
• Similarly, as issues surrounding oversupply remain consistent – OPEC+ members continue to delay resupply with India suggesting a return to higher crude demand in the short term being unlikely.

• API 2 coal prices dropped 4.0% this week to average $55.21/t
  Reports showed that coal imports into the EU dropped for the sixteenth consecutive week.
• The EU ETS carbon price followed the previous week’s decline, slipping 0.8% to average €25.95/t, falling as a result of weaker demand at EUA auctions.
• The markets remained cautious over the number of future EUA’s in circulation at auctions.
• The carbon price was weighed upon by concerns on wider economy recover due to COVID-19 – whilst this week’s outage to the EU ETS registry is expected to be short lived.
  

Wholesale price snapshot