Energy Wholesale Market Review, 28 June 2019

Baseload electricity

• The day-ahead contract was 5.0% lower at £36.1/MWh, a near one-month low. Day-ahead power is 30.8% lower than the same time last year (£52.2/MWh).
• Month-ahead (July) power fell 2.5% to end the week at £36.8/MWh.

• Annual October 19 power rose slightly, up 0.1% week-on-week to £51.8/MWh.
• The contract is 1.2% lower than the same time last month (£52.4/MWh), but 2.1% higher than the same time last year (£50.8/MWh).

Forward curve comparison

Annual October Contract

Peak electricty

• Day-ahead peak power dropped 7.5% to £38.0/MWh, £1.9/MWh above its baseload counterpart.
• Day-ahead peak power is 33.0% lower than the same time last year when it was £56.8/MWh.
• July 19 peak power decreased 2.1% to end the week at £40.6/MWh.

• Annual October 19 peak power slipped 0.2% to £57.5/MWh, £5.7/MWh above its baseload power counterpart.
• The contract is 1.5% below its value this time last month (£58.3/MWh), and 1.2% above the same time last year when it was £56.8/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 0.7%, mirroring their gas counterparts.
• Both summer 20 and winter 20 rose by 0.8% to £48.4/MWh and £56.1/MWh, respectively.
• However, winter 19 power was slightly lower, down 0.5% at £55.2/MWh.

• Seasonal peak power contracts experienced mixed movements, with winter 19 and 20 moving lower, whilst summer 20 and 21 rose.
• Winter 19 peak power slipped 1.0% to £61.8/MWh, whilst summer 20 peak power lifted 0.7% to £53.1/MWh.

Commodity price movements

Oil and Coal

Carbon

• Brent crude oil rose for a fourth consecutive week, up by 5.2% to average $65.7/bl.
• Prices were supported towards the end of the week by anticipation that the G20 summit in Japan would see a continuation of previously collapsed trade talks between the US and China. This, in combination with expectations that OPEC will agree to extend production cuts into the second half of the year at its meeting on 1-2 July, pushed prices to $66.8/bl, a fresh one-month high.
• API 2 coal prices reversed recent downward movements, up 1.9% to average $64.3/t. Coal prices recovered slightly last week following an uptick in demand due to record high temperatures across Europe, which led to higher cooling demand.

• EU ETS carbon prices recovered further, rising 5.9% to average €26.5/t. EUAs peaked at €27.5/t on 26 June, a fresh two-month high and approaching April’s 11-year high of €27.8/t.
• Carbon prices were supported by a combination of lower auction volumes and a heatwave across Europe. The heatwave led to a rise in cooling-demand, some of which was met by thermal generation and therefore increased demand for EUAs.
• Despite the recent recovery in EU ETS carbon prices, some analysts are cutting forecasts for the remainder of 2019. Energy Aspects have reportedly cut Q319 and Q419 average predictions to €24.3/t and €27.3/t respectively, as the risk of a no-deal Brexit continues to loom.

Wholesale price snaphot