Energy Wholesale Market Review, 8 February 2019

Baseload electricity

• Day-ahead power dropped 1.4% to end the week at £53.8/MWh, amid forecasts of higher wind generation.
• March and April 19 power contracts rose 0.5% and 0.2% to £53.7/MWh and £52.8/MWh respectively.

• Annual April 19 power lifted slightly, up 0.1% to £55.9/MWh.
• The contract is 3.4% below the same time last month when it was £57.9/MWh, but 31.8% above the same time last year when it was £42.4/MWh.

Forward curve comparison

Annual April Contract

Peak electricity

• Day-ahead peak power fell 5.5% to £57.8/MWh. This was £4.0/MWh above its baseload counterpart.
• Month-ahead peak power went up 1.0% to end the week at £57.9/MWh, £4.2/MWh above its baseload counterpart.

• Week-on-week, annual April 19 peak power lifted 0.1% to £61.3/MWh. The contract remains £5.4/MWh above its baseload power counterpart.
• The contract was 2.9% below its price last month (£63.1/MWh), but 30.0% higher than its value last year (£47.2/MWh).

Forward curve comparison

Annual April contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

• Seasonal power contracts lifted 0.1% on average from the previous week. However, both summer 19 and summer 21 dropped week-on-week.
• Summer 19 power slipped 0.4% to £51.6/MWh. The contract fell to a six-month low of £51.2/MWh on 4 February.

• Most seasonal peak power contracts went up this week, lifting 0.1% on average.
• The summer 19 peak contract was the only contract to decline, down 0.3% to £55.5/MWh, remaining £3.9/MWh above its baseload power counterpart.

Commodity price movements

Oil and Coal 

Carbon

• • Brent crude oil prices recovered from the previous week’s decline, up 1.7% to average $62.2/bl.
  • Within-day oil prices rose to a two-month high of $63.6/bl on 4 February.
  • According to data from cargo-tracking company Kpler, the US became the biggest exporter of oil to the UK in January, for the first time since the Suez Crisis in 1956. Over the month, US crude imports averaged 264,000bpd, well above the average volumes throughout 2018 of 160,000bpd.
  • API 2 coal prices slipped 5.2% to average $80.4/t.
  • API 2 coal ended the week at $77.65/t, a 10-month low, as the Chinese New Year holiday saw a hiatus in trading and lower demand in the region.

• EU ETS carbon prices reversed the previous week’s decline, up 2.5% to average €23.2/t.
• Within-day carbon prices fell to a two-month low of €21.3/t on 4 February.
• So far this year, EU ETS carbon has averaged €23.3/t, slightly above the price forecasts by analysts at Reuters who are forecasting the average EUA price at €21.9/t this year, before it rises to €23.7/t in 2020.
• Worries around Brexit continue to provide pressure to EU ETS carbon prices as concerns of a ‘No Deal’ Brexit grows.
• However, the return of cooler weather towards the end of February may increase conventional-fired power generation and therefore drive demand for EUAs.

Wholesale price snapshot