Energy Wholesale Market Review, 8 March 2019

Baseload electricity

• Day-ahead power remained unchanged £48.0/MWh.
• The contract dropped to an 11-month low of £46.9/MWh on 6 March, amid forecasts of higher wind.
• The April and May 19 power contracts were down 0.6% and 0.5% to £47.6/MWh and £47.2/MWh, respectively.

• Annual April 19 power fell 0.7% to £53.1/MWh.
• The contract is 5.0% below the same time last month when it was £55.9/MWh, but 19.1% above the same time last year when it was £44.6/MWh.

Forward curve comparison

Annual April Contract

Peak electricity

• Day-ahead peak power remained at £51.0/MWh, staying £3.0/MWh above its baseload counterpart.
• Day-ahead peak power is 9.6% lower than the same time last year when it was £56.4/MWh.
• Both April and May 19 peak power slipped 1.1% to £50.1/MWh and £50.5/MWh, respectively.

• Annual April 19 peak power decreased 0.8% to £58.4/MWh, £5.3/MWh above its baseload power counterpart.
• The contract was 4.7% below its price last month (£61.3/MWh), but 18.2% higher than its value last year (£49.4/MWh).

Forward curve comparison

Annual April contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

• Most seasonal power contracts reversed the previous week’s gains, dropping 0.2% on average.
• Summer and winter 19 contracts fell to £48.2/MWh and £58.0/MWh respectively.
• Summer and winter 20 power both rose from the previous week, up 0.2% and 0.5% to £48.6/MWh and £55.4/MWh respectively.

• Most seasonal peak power contracts went down this week, dropping by 0.3% on average.
• The summer 19 peak contract was 0.7% lower at £52.0/MWh, £3.8/MWh above its baseload power counterpart.

Commodity price movements

Oil and Coal 

Carbon

• • Brent crude oil fell for a second consecutive week, slipping 0.4% to average $65.8/bl.
  • Oil prices continue to fluctuate in response to OPEC+ production cuts creating a tighter market, and rising US crude production which is easing the impact of OPEC’s cuts.
  • API 2 coal prices fell for the first time in three weeks, down 1.0% to average $78.7/t.
  • Despite coal prices starting the week at a three-week high of $80.8/t, prices ended the week at $76.4/t, the lowest since 18 February.
  • Coal prices have been pressured by weaker demand in the Northern Hemisphere, amid warmer temperatures across Asia and Europe.

• EU ETS carbon prices rose 12.5% to average €22.8/t.
• Within-day carbon prices rose to €23.5/t on 5 March, the highest since 8 February.
• Traders are suggesting that the recent recovery in EU ETS carbon prices is unsustainable as there are no market signals supporting the commodity, particularly as temperatures remain above seasonal normal temperatures and gas prices across Europe are at multi-month lows. This would suggest that less coal-fired power generation is required as gas-fired power generation remains dominant.

Wholesale price snapshot