Energy Wholesale Market Review, 5 October 2018

Baseload electricity

• Day-ahead power fell 1.3% to £66.3/MWh.
• Prices started the week down at £63.3/MWh with forecasts of higher wind generation.
• Both November 18 and December 18 power decreased week-on-week, dropping 1.2% and 0.8% to £70.5/MWh and £71.0/MWh respectively.

• The annual April 19 power contract rose 3.6% to end the week at £64.7/MWh (up from £62.5/MWh).
• The contract is £1.2/MWh (1.9%) higher than the same period last month, and 51.4% above the same time last year when it was £22.0/MWh.

Forward curve comparison

Annual October Contract

Peak electricity

• Day-ahead peak power continued to decline, dropping 3.3% week-on-week to £70.1/MWh. This was £3.8/MWh above its baseload counterpart.
• Month-ahead peak power went down 1.4% to end the week at £78.3/MWh, £7.8/MWh above its baseload counterpart.

• Week-on-week, annual April 19 peak power went up 3.2% to £70.8/MWh. The contract is £6.1/MWh above its baseload power counterpart.
• The contract was 2.2% above its price last month (£69.3/MWh) and 44.8% higher than its value last year (£48.9/MWh).

Forward curve comparison

Annual October Contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

• Seasonal contracts were up 3.8% on average.
• Summer 19 rose 3.1% to £62.0/MWh, despite starting the week at a four-week low of £56.6/MWh.
• Winter 19 power was up 4.0% to £67.4/MWh.

• All seasonal peak power contracts increased last week, up 3.3% on average.
• Prices followed an increase in gas prices, with seasonal gas prices gaining 3.9% on average.

Commodity price movements

Oil and Coal

Carbon

• The weekly average Brent crude oil price rose for the seventh consecutive week, gaining 3.8% to average $84.7/bl, up from $81.6/bl the previous week.
• Oil hit a fresh four-year high of $86.1/bl on 4 October. However, the announcement by Nigeria’s OPEC representative suggests that OPEC will balance the oil market albeit with little spare capacity.
• API 2 coal rose 1.8% to average $99.4/t last week, hitting a five-year high of $100.2/t on 3 October.
• Winter restocking efforts in Asia continue to sustain prices at current levels, with reports of falling coal inventories in India expected to support demand.

• EU ETS carbon prices rose averaged €21.1/t.
• A total of 23.8mn EUAs were up for auction this week. Auction volumes are set to drop by 9.2% to 21.6mn EUAs next week, following allowances from a failed UK auction in September being reauctioned this week.
• Prices started the week down at €20.8/t but rose throughout the week to €21.3/t on 5 October following a successful German auction of 5.5mn EUAs at €21.1/t.
• Belgian nuclear power outages could result in higher fossil fuel burning in Europe and push demand for EUAs higher.

Wholesale price snapshot