Energy Wholesale Market Review, 3 May 2019

Baseload electricity

• Day-ahead power was down 2.6% to end the week at £42.9/MWh, despite forecasts of weaker wind output.
• June and July 19 power were down 2.9% and 1.1% to £42.8/MWh and £43.2/MWh respectively.

• Annual October 19 power decreased 6.1% week-on-week to £52.2/MWh.
• The contract is 3.0% lower than the same time last month (£53.8/MWh).

Forward curve comparison

Annual April Contract

Peak electricity

• Day-ahead peak power fell 7.5% to £43.0/MWh, £0.1/MWh above its baseload counterpart.
• Day-ahead peak power is 18.9% lower than the same time last year when it was £53.0/MWh.
• June and July 19 peak power were down 3.7% and 1.0% at £46.8/MWh and £47.4/MWh, respectively.

• Annual October 19 peak power dropped 5.5% to end the week at £57.9/MWh, remaining £5.7/MWh above its baseload power counterpart.
• The contract is 2.3% below its value this time last month (£53.2/MWh).

Forward curve comparison

Annual April contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

• Seasonal power contracts were 5.7% lower on average.
• Winter 19 and 20 contracts fell 5.6% and 5.7% to £56.7/MWh and £55.6/MWh respectively.
• Winter 19 power is up 9.8% from the same time last year when it was £51.6/MWh.

• Seasonal peak power contracts fell 5.2% on average, with winter 19 peak power down 5.0% at £63.8/MWh.
• Summer and winter 20 peak contracts were 6.2% and 4.5% lower at £52.0/MWh and £63.2/MWh.

Commodity price movements

Oil and Coal 

Carbon

• • Brent crude oil prices fell for the first time in eight weeks, dropping 3.7% to average $71.5/bl.
  • Total US crude production ended April at a record high of 12.3mn bpd, causing prices to fall below $70/bl on 2 May, a one-month low.
  • OPEC oil production in April was expected at a four-year low of 30.2mn bpd, down 90,000 bpd from March.
  • API 2 coal prices fell 3.6% to average $70.1/t, dropping as low as $69.7/t on 2 May, also a one-month low.
  • Coal prices have continued to be pressured by weak demand and high coal stocks at key ARA terminals, which ended April at 6.5mn tonnes.
  • Coal imports into ARA terminals are estimated to have been 50% lower in April than in March, and 20% lower than the same time last year.

• EU ETS carbon prices reversed recent gains, falling 5.3% to average €25.7/t last week.
• Carbon prices dropped below €25/t at the end of the week, as last-minute buying for the 30 April compliance deadline ends, and forecasts of higher wind generation in Germany will push coal-fired power plant out of the generation mix and ease demand for EUAs.
• Reuters released a revised EU ETS carbon price forecast last week, projecting EUAs to remain between €23.5/t-€28.0/t in the near-term. The new Q219 forecast has been raised €2/t to €25/t, whilst the forecasts for both the H219 and 2019 averages are unchanged at €23/t.

Wholesale price snapshot