Energy Wholesale Market Review, 22 February 2019

Baseload electricity

• Day-ahead power rose 1.2% to £49.1/MWh.
• The contract hit a fresh eight-month low of £48.1/MWh on 19 February.
• March and April 19 power contracts dropped 4.2% and 3.8% to £48.1/MWh and £47.9/MWh, respectively.

• Annual April 19 power was down 2.0% to £52.7/MWh, the lowest since 27 July 2018.
• The contract is 2.0% below the same time last month when it was £58.4/MWh, but 20.7% above the same time last year when it was £43.7/MWh.

Forward curve comparison

Annual April Contract

Peak electricity

• Day-ahead peak power rose 0.8% to £52.9/MWh, £3.8/MWh above its baseload counterpart.
• Day-ahead peak power is 25.2% lower than the same time last year when it was £64.7/MWh.
• Month-ahead peak power fell 4.6% to end the week at £51.8/MWh, £3.7/MWh above its baseload counterpart.

• Week-on-week, annual April 19 peak power declined 2.1% to £58.1/MWh, £5.4/MWh above its baseload power counterpart.
• The contract was 9.0% below its price last month (£63.8/MWh), but 20.2% higher than its value last year (£48.3/MWh).

Forward curve comparison

Annual April contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

• Seasonal baseload power contracts dropped 1.5% on average from the previous week, following their gas counterparts lower.
• Summer 19 power saw the largest change, dropping 2.6% to £47.9/MWh, a fresh nine-month low.

• All seasonal peak power contracts went down this week, decreasing 1.7% on average.
• The summer 19 peak contract was 2.7% lower, falling to £51.7/MWh, £3.8/MWh above its baseload power counterpart.

Commodity price movements

Oil and Coal 

Carbon

• • Brent crude oil rose for the third consecutive week, up 5.2% to average $66.7/bl.
  • Within-day oil prices rose above $67.5/bl on 22 February, the highest since 16 November 2018.
  • Prices were supported by news of high compliance from OPEC members with the 1.2mn bpd production cuts.
  • Concerns of a tighter market comes despite data released by EIA showing that US crude oil production has hit a record 12mn bpd the previous week.
  • API 2 coal prices started to reverse recent declines, up 2.6% to average $78.0/t.
  • This week, Glencore, which accounts for ~25% of global thermal coal supply, announced that it would not increase production beyond 2019.

• EU ETS carbon prices fell 5.1% to average €19.9/t.
• Within-day carbon prices fell below €18.5/t on 22 Friday, a fresh three-month low.
• Carbon prices have been pressured by a fall in gas prices throughout Europe, which have been weighed on by above seasonal normal temperatures and comfortable gas supplies.
• Comfortable gas supplies, particularly with the influx of LNG tankers to the NW Europe, has improved the economics for gas-fired power plants to generate electricity during period of low renewables output and pushed coal-fired power plants out of the power mix.
• Ongoing talks about coal phase-out plans across the EU, as well as the potential for stricter emissions reductions by 2030, also prevented gains in carbon.

Wholesale price snapshot