Energy Wholesale Market Review, 29 March 2019

Baseload electricity

• Day-ahead power was down 4.5% at £42.0/MWh, a fresh 18-month low, following gas prices lower.
• The April and May 19 power contracts were down 1.6% and 2.0% to £42.4/MWh and £41.6/MWh, respectively.

• Annual April-19 power was down 0.7% week-on-week, falling to £48.2/MWh.
• The contract is 9.9% below the same time last month (£53.5/MWh).

Forward curve comparison

Annual April Contract

Peak electricity

• Day-ahead peak power decreased 6.4% to £42.5/MWh, just £0.5/MWh above its baseload counterpart.
• Day-ahead peak power is 16.7% lower than the same time last year when it was £51.0/MWh.
• April and May 19 peak power fell 1.2% and 1.7% to £45.4/MWh and £44.9/MWh, respectively.

• Annual April 19 peak power slipped 0.5% to £53.5/MWh, remaining £5.3/MWh above its baseload power counterpart.
• The contract is 9.1% below its price last month (£58.9/MWh), but 4.2% higher than its value last year (£51.3/MWh).

Forward curve comparison

Annual April contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

• Nearly all seasonal power contracts rose, gaining 1.4% on average.
• Summer 19 power was the exception, down 1.8% to £42.8/MWh, a near one-year low.

• Seasonal peak power contracts experienced mixed movements, up 0.2% on average.
• The summer 19 peak contract was down 1.4% at £46.6/MWh, whilst winter 19 peak power gained 0.2% to £60.4/MWh.

Commodity price movements

Oil and Coal 

Carbon

• • Brent crude oil prices averaged $67.5/bl this week, relatively unchanged from the previous week.
  • Brent crude oil prices experienced their biggest quarterly rise since 2009, with prices up ~27% from the start of the year. The price spike led US President Donald Trump to call for OPEC to increase oil production in a tweet on 28 March suggesting that “World Markets are fragile” and that the “price of Oil [is] getting too high.” Although the initial response in the market saw within-day Brent crude oil prices lose $1.0/bl, prices recovered to end the week above $68.6/bl.
  • API 2 coal prices went up for the first time in four weeks, rising 0.6% to average $73.9/t.
  • Within-day prices rose to a two-week high of $75.3/t in the middle of the week but ended at a seven-week low of $72.0/t.

• EU ETS carbon prices lifted slightly, up 1.5% to average €21.6/t.
  Within-day carbon prices rose above €22.3/t at the end of the week, a two-week high.
• Carbon prices have been supported by “technical buying”, as according to traders, there is little reason for recent upwards momentum.
• Carbon prices were expected to remain relatively flat amid warm weather and lower energy demand keeping coal-fired power plant generation minimal, and uncertainty around Brexit also pressuring prices.

Wholesale price snapshot