Energy Wholesale Market Review, 25 March 2022

Headlines

This week represented a relatively mixed outcome for gas and power prices, with conflicting market fundamentals dictating the movement of prices. Firstly, day-ahead gas rose 4.9% to 257.00p/th, following Russia announcing it will be looking to seek payment for its gas sold to ‘unfriendly’ countries in Roubles, sparking fears of exacerbated gas supply disruption on the continent. However, day-ahead power fell 10.7% to £201.00/MWh, afflicted by periods of higher wind outturn in the week, softening supply margins – compounded by losses in UK ETS carbon prices week-on-week. Elsewhere, April 22 gas was up 4.2% at 265.00p/th, and May 22 gas increased 4.6% to 268.00p/th – following near-term contracts higher. The majority of seasonal gas contracts rose this week, up by 11.0% on average, with both summer 22 and winter 22 gas up 5.4% and 6.1% respectively, lifting to 271.00p/th and 266.00p/th. Most seasonal power contracts declined this week, down on average by 1.9%, as summer 22 power decreased 0.9% to £228.00/MWh, while winter 22 fell 2.2% to £223.00/MWh. Carbon markets saw mixed movements from the week previous. UK ETS prices fell 3.4% week-on-week to average £77.21/t. However, EU ETS carbon prices rose 4.8% to average €78.97/t.

Baseload electricity
  • Day-ahead power fell 10.7% to £201.00/MWh, following following periods of higher wind outturn in the week, softening supply margins – compounded by losses in UK ETS carbon prices.
  • April 22 power climbed 0.2% at £230.50/MWh and May 22 power increased 0.6% to £232.50/MWh.
  • Q2-22 power moved 0.1% higher to £230.00/MWh.
  • The annual April 22 contract lost 1.5% to £225.50/MWh, 314.3% higher than the same time last year (£54.43/MWh).
Forward Curve Comparison

 

Annual April Contract

Peak electricity
  • Day-ahead peak power was down 2.1% to £230.00/MWh, following baseload power lower.
  • April 22 peak power gained 1.2% at £247.00/MWh, and May 22 peak power increased 1.9% to £244.79/MWh.
  • The annual April 22 peak power rose 43.1% to £366.47/MWh
  • This is 500.00% higher than the same time last year (61.08/MWh).

Forward curve comparison

 

Annual April contract

 

Seasonal power prices

Seasonal baseload power contracts

 

 

Seasonal baseload power curve

 

 

  • The majority of seasonal power contracts declined this week, down on average by 1.9%.
  • Summer 22 power decreased 0.9% to £228.00/MWh, while winter 22 fell 2.2% to £223.00/MWh.
  • Most seasonal peak power contracts saw gains this week, up 20.9% on average.
  • Summer 22 and winter 22 peak power increased 72.0% and 17.2% respectively, rising to £415.50/MWh and £317.43/MWh.
Commodity price movements
 

Oil and Coal

 

Carbon

  • Brent crude prices rose week-on-week, reversing the previous week’s decline. As a result, prices lifted 12.3% week-on-week, to average $116.72/bl
  • At the week’s start, prices were buoyed by the prospect of EU nations joining the US in a Russian oil embargo, adding into future market tightness and supply disruption amid a lack of alternative sources of supply
  • Elsewhere, prices gained further support from the disruption of Russian exports via the Caspian pipeline
  • Carbon markets saw mixed movements from the week previous. UK ETS prices fell 3.4% week-on-week to average £77.21/t. However, EU ETS carbon prices rose 4.8% to average €78.97/t.
  • EU ETS carbon prices were supported higher EUA demand amid rising gas demand and news of the EU agreed a deal to replace Russian gas supplies with US LNG. However, towards the end of the week prices did ease due to declining market liquidity
  • UK ETS prices eased across the week due to strong wind output and lowering demand
Wholesale price snapshot 

 

Posted by TEAM on 25 March 2022