Energy Wholesale Market Review, 8 January 2021

• Day-ahead power rose 6.6% to £68.25/MWh, following continued trends of tight supply margins.
• February 21 power climbed 7.0% at £70.61/MWh and March 21 power increased 5.1% to £62.03/MWh.

• Q221 power moved 9.4% higher to £54.15/MWh.
• The annual April 21 contract rose 2.6% to £56.08/MWh, 19.5% higher than the same time last year (£46.94/MWh).

Forward curve comparison

Annual April Contract

• Day-ahead peak power was up 3.8% to £75.50/MWh, following its baseload counterpart higher.
• February 21 peak power gained 2.5% at £81.52/MWh, and March 21 peak power increased 2.1% to £65.31/MWh.

• The annual April 21 peak power lost 2.1% to £61.62/MWh.
• This is 15.7% lower than the same time last year (53.27/MWh).

Forward curve comparison

Annual April contract

Seasonal baseload power contracts

Seasonal baseload power curve

• The majority of seasonal power contracts increased this week, up on average by 1.7%.
• Summer 21 and winter 21 expanded 2.6% and 2.6% respectively, rising to £53.16/MWh and £59.00/MWh.

• Most seasonal peak power contracts boosted this week, up 1.3% on average.
• Summer 21 and winter 21 peak power increased 1.7% and 2.5% respectively, falling to £57.02/MWh and £66.22/MWh.

Oil and Coal

Carbon

• Brent crude oil resumed gains last week, as observed towards the end of December, averaging $53.45/bl last week. Prices reached a near 11-month high on Friday at $54.74/bl.
• The Brent crude price found support from supply cut pledges from Saudi Arabia, to combat market oversupply and demand concerns as many major economies enter periods of tougher lockdown restrictions to combat the spiral in cases from coronavirus.
• Further gains were suppressed by the news that COVID-19 infection rates have risen sharply in recent weeks with the emergence of a new strain of the virus.
• API 2 coal fell 2.1% from the previous week to average $68.04/t.

• EU ETS carbon climbed for the eighth consecutive week, rising 4.1% to average €34.02/t last week. Carbon prices were almost 17% higher than the same time last month.
• Prices on 8 January reached a new all-time high at €34.83/t. Prices continued to find support from ambitious climate targets made by the EU with a tighter carbon market expected as a result.
• The UK left the EU ETS scheme on 1 January 2021, but the government has confirmed the implementation of a replacement UK ETS, potentially linked to the EU ETS, with auctions to start no later than Q2 2021. UK emitters are still required to comply with their 2020 emissions under the EU ETS, with a deadline to surrender allowances on 30 April 2021.

Wholesale price snapshot