Energy Wholesale Market Review, 30 August 2019

• Day-ahead power was down 4.3% to £39.3/MWh, pressured by periods of higher wind generation and a drop in day-ahead gas prices.
• September 19 power slipped 0.3% to £40.7/MWh.
• October 19 power gained 2.0% to £42.6/MWh.

• Annual October 19 power was unchanged at £50.0/MWh.
• The contract is 7.0% below the same time last month (£53.7/MWh), and 13.7% lower than the same time last year (£57.9/MWh).

Forward curve comparison

Annual October Contract

• Day-ahead peak power was down 0.6% to £42.0/MWh, £2.7/MWh above its baseload counterpart.
• September 19 peak power lost 1.2% to £43.5/MWh.
• October 19 peak power was 1.8% higher at £47.6/MWh.

• Annual October 19 peak power was up 0.2% at £55.6/MWh, remaining £5.6/MWh above its baseload power counterpart.
• The contract is 6.0% below its value this time last month (£59.1/MWh), and 12.7% below the same time last year when it was £63.7/MWh.

Forward curve comparison

Annual October contract

Seasonal baseload power contracts

Seasonal baseload power curve

• Seasonal baseload power contracts were down 0.1% on average.
• Winter 19 power climbed 0.9% to £52.6/MWh, while summer 20 power fell by 0.9% to £47.4/MWh.

• Seasonal peak power contracts were up 0.2% on average.
• Winter 19 peak power increased 0.7% to £59.2/MWh.

Oil and Coal

Carbon

• Brent crude oil was up 0.4%, averaging $60.2/bl.
• Oil prices were supported by news of another weekly decline in US crude stocks, which fell by over 10mn barrels.
• US bank Morgan Stanley lowered its oil price forecasts for the remainder of 2019, down to $60/bl from $65/bl. The bank cited a weaker global economic outlook, lower oil demand and growing US supplies as the main drivers for the reduction.
• API 2 coal prices fell 0.6% to $63.6/t, dropping to $63.1/t on 28 August, the lowest since 19 June.
• According to BEIS data, UK generators imported 3.9mt of coal in H119, a 19% reduction from H118. However, with generators burning only 1.5mt of coal in H119, a 60% reduction y-o-y, stocks at plants in June 2019 reached their highest levels since November 2017 at 4.7mt.

• EU ETS carbon prices averaged €26.0/t, down 1.2% from the previous week.
• Carbon prices ended the week at €26.8/t, a 10-day high. Prices found support from halved auction volumes in August, while an optimistic outlook for US-China trade talks resuming provided uplift for the wider energy complex, feeding through to carbon prices.
• The return of normal auction volumes in September will provide downwards pressure to prices, with auction volumes up 24% this week from last week. However, the forecast of weaker renewables generation and temperatures well below seasonal normal levels in Germany will see a rise in coal-fired power generation, and therefore greater demand for EUAs at auctions this week.

Wholesale price snaphot