Energy Wholesale Market Review, 21 June 2019

Baseload electricity

• The day-ahead contract was 3.2% lower at £38.0/MWh, a fresh two-week low. Day-ahead power is 29.0% lower than the same time last year (£53.5/MWh).
• Month-ahead (July) power ended the week at £37.7/MWh.

• Annual October 19 power rose by 0.3% week-on-week to £51.7/MWh.
• The contract is 2.9% lower than the same time last month (£53.3/MWh), but 4.5% higher than the same time last year (£49.5/MWh).

Forward curve comparison

Annual October Contract

Peak electricity

• Day-ahead peak power fell 1.8% to £41.1/MWh, £3.1/MWh above its baseload counterpart.
• Day-ahead peak power is 28.4% lower than the same time last year when it was £57.4/MWh.
• July 19 peak power decreased 2.7% to end the week at £41.4/MWh.

• Annual October 19 peak power was unchanged, remaining at £57.6/MWh, £5.9/MWh above its baseload power counterpart.
• The contract is 2.5% below its value this time last month (£59.1/MWh), but 4.2% above the same time last year when it was £55.3/MWh.

Forward curve comparison

Annual October contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

• On average, seasonal baseload power contracts were up 0.3%, mirroring their gas counterparts.
• Winter 19 power was slightly lower, down 0.2% at £55.4/MWh. The contract hit a near three-month low of £54.9/MWh on 19 June.

• Most seasonal peak power contracts rose, gaining 0.9% on average.
• Winter 19 peak power slipped 0.2% to £62.5/MWh, whilst summer 20 peak power lifted 0.2% to £52.7/MWh.

Commodity price movements

Oil and Coal

Carbon

• Brent crude oil prices rose for a second consecutive week, up by 1.0% to average $62.4/bl.
• Prices were supported by growing tensions between Iran and the US, following news that Iran shot down a US military drone. Tensions in the Middle East have resulted in a sharp rise in insurance for tankers in the region, and the addition of a risk premium to oil prices.
• API 2 coal prices slipped 1.7%, averaging $63.1/t. Coal prices started the week at $62.8/t, the lowest since March 2017 as demand remains low as ARA coal stocks were at 6.8mt as of 17 June.
• With temperatures expected to exceed 35oC in Germany this week, and forecasts of lower wind output, coal-fired generation will likely rise to meet the increase in cooling demand and will act as a bullish influence on coal prices in the weeks ahead.

• EU ETS carbon prices edged 0.3% higher to average €25.1/t.
• This was despite pressure following an increase in the number of auctions which took place compared to the previous week, boosting the supply of EUAs.
• Support for carbon prices is expected in the month-ahead as forecasts of warmer weather across Europe will lead to a rise in cooling-demand, some of which will be met by thermal generation.

Wholesale price snapshot