Energy Wholesale Market Review, 26 October 2018

Baseload electricity

• Day-ahead power rose 3.6% to £66.7/MWh.
• Prices started the week at £61.3/MWh, the lowest since 18 August, amid forecasts of higher wind generation.
• November 18 power fell to a multi-month low, dropping 4.8% to £64.8/MWh.

• Annual April 19 power decreased 1.0% to £59.9/MWh.
• The contract is £2.6/MWh (4.2%) lower than the same period last month, and 38.6% above the same time last year when it was £43.2/MWh.

Forward curve comparison

Annual October Contract

Peak electricity

• Day-ahead peak power increased 8.0% week-on-week to £74.0/MWh. This was £7.3/MWh above its baseload counterpart.
• Month-ahead peak power went down 4.4% to end the week at £72.5/MWh, remaining £7.7/MWh above its baseload counterpart.

• Week-on-week, annual April 19 peak power went down 0.9% to £65.6/MWh. The contract remains £5.7/MWh above its baseload power counterpart.
• The contract was 4.4% below its price last month (£68.6/MWh) and 33.4% higher than its value last year (£49.2/MWh).

Forward curve comparison

Annual October Contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

• Seasonal contracts were up 0.8% on average.
• Summer and winter 19 fell 1.7% and 0.2% to £57.0/MWh and £62.7/MWh respectively.
• Summer 20 power was up 3.2% to £51.9/MWh.

• Most seasonal peak power contracts increased this week, up 0.8% on average.
• Prices followed their gas counterparts; however seasonal gas contracts fell 0.4% on average.

Commodity price movements

Oil and Coal

Carbon

• The weekly average Brent crude oil price fell for a third week, dropping 3.8% to average $77.3/bl, down from $80.4/bl the previous week.
• Oil prices dropped to $75.2/bl on 24 October, the lowest since August, as Saudi Arabia has warned of oversupply in the market this year following the announcement that the nation would increase production to 11.0mn bpd ahead of the Iranian sanctions coming into effect on 5 November.
• API 2 coal prices recovered from the previous two weeks of decline, rising 1.3% to average $97.7/t.
• This week, it was announced that Chinese coal output from its top producing region, Inner Mongolia, was up 11.1% between Q118 and Q318, with output at 673.3mn tonnes in September.

• EU ETS carbon prices slipped 0.5% to average €19.0/t, continuing to remain below €20.0/t throughout the week.
• Prices dropped as low as €18.3/t on 23 October.
• With German auctions postponed from mid-November until Q119, the loss of nearly 22mn EUAs from auction volumes could see carbon prices back above €20.0/t in the coming weeks.
• However, uncertainty over Brexit continues to impact prices and may outweigh support from lower EUA volumes.

Wholesale price snapshot