Energy Wholesale Market Review, 31 May 2019

Baseload electricity

• Day-ahead power fell 3.8% week-on-week to a near two-year low of £35.6/MWh, pressured by lower gas prices and decreasing summer power demand.
• Month-ahead power lost 4.6%, ending the week at £39.1/MWh.

• Annual October 19 power was down 1.6% week-on-week at £52.4/MWh.
• The contract is 0.4% higher than the same time last month (£52.2/MWh).
  

Forward curve comparison

Annual October Contract

Peak electricity

• Day-ahead peak power rose 0.4% to £38.7/MWh, £3.1/MWh above its baseload counterpart.
• Day-ahead peak power is 35.9% lower than the same time last year when it was £60.3/MWh.
• June and July 19 peak power both fell 4.3% to £43.0/MWh and £43.3/MWh, respectively.

• Annual October 19 peak power slipped 1.3% to end the week at £58.3/MWh, £5.9/MWh above its baseload power counterpart.
• The contract is 0.8% above its value this time last month (£57.9/MWh), but 5.0% above the same time last year when it was £55.5/MWh.

Forward curve comparison

Annual October contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

• All seasonal power contracts moved lower, falling 1.1% on average.
• Winter 19 power declined 2.1% to £56.6/MWh, a near one-month low.

• Seasonal peak power contracts slipped 0.5% on average, although summer 21 peak power rose 1.7% to £52.8/MWh.
• Winter 19 peak power dropped 0.9% to £63.8/MWh.

Commodity price movements

Oil and Coal 

Carbon

• • Brent crude oil fell 3.9% to average $68.21/bl.
  • Oil prices dropped to $64.9/bl on 31 May, the lowest since mid-February.
  • OPEC ministers will meet on 25 June to discuss the success of the groups most recent production cut of 1.2mn bpd, with overall production down at 30.17mn bpd in May, the lowest since 2015. Currently, the group is not expected to end production cuts as prices have dropped below $70/bl, and the consensus is that the market remains oversupplied.
  • API 2 coal prices fell 2.8% to average $66.1/t. Prices ended the week at $65.4/t, a two-year low.
  • API 2 coal prices have been pressured by weak demand in Europe, as higher gas storage levels in NW Europe and downwards movements in European hub gas prices continue to push coal-fired generation out of the power mix.

• EU ETS carbon prices lifted slightly this week, up 1.2% to average €25.3/t.
• Prices have risen despite continued pressure from Brexit, following Theresa May’s resignation on 24 May which has increased the likelihood of a hard Brexit.
• Bearish momentum has also been expected from cheaper gas prices throughout Europe, which has acted to drive coal-fired power plant out of the generation mix and therefore lowered demand for EUAs.
• With carbon auctions in Norway, Iceland, and Liechtenstein due to start from 3 June – which will be combined with EUA volumes sold by EU member states every Monday, Tuesday and Thursday – there is expected to be downwards pressure on carbon prices in the weeks ahead.

Supplier tariff movements

In April, 14 suppliers decreased the price of their cheapest tariff or launched new cheaper tariffs, while 14 suppliers increased the price of their cheapest available tariff. Eversmart Energy launched a new fixed tariff which was £178/year lower than its variable tariff, while ESB Energy launched an exclusive tariff with uSwitch priced at £978/year, £120/year lower than its next cheapest two-year tariff.

Wholesale price snapshot