Energy Wholesale Market Review, 9 April 2020

• Day-ahead power rose 53.2% to £28.35/MWh, recovering from an all-time low last week as lower wind generation helped to lift prices.
• May 20 power climbed 8.6% to £26.60/MWh and June 20 power increased 8.1% to £28.10/MWh.

• Q320 power moved 6.9% higher to £31.00/MWh.
• The Annual October 20 contract rose 6.9% to £39.62/MWh, 26.0% lower than the same time last year (£53.53/MWh).

Forward curve comparison

Annual October Contract

• Day-ahead peak power was down 6.5% to £28.00/MWh following continued lower demand in peak hours of the day.
• May 20 peak power gained 5.3% to £29.36/MWh, and June 20 peak power increased 5.7% to £31.29/MWh.

• The Annual October 20 peak power lost 7.1% to 44.98/MWh.
• This is 24.9% lower than the same time last year (59.88/MWh).

Forward curve comparison

Annual October contract

Seasonal baseload power contracts

Seasonal baseload power curve

• Seasonal power contracts boosted this week, up on average by 5.5%.
• Winter 20 and summer 21 expanded 5.9% and 8.0% respectively, rising to £41.43/MWh and £37.80/MWh.

• Most seasonal peak power contracts boosted this week, up £6.2% on average.
• winter 20 and summer 21 peak power increased 5.8% and 8.5% respectively, falling to £47.81/MWh and £42.14/MWh.

Oil and Coal

Carbon

• Brent crude oil gained 26.4% to average $33.16/bl this week, continuing momentum seen from the previous week, as the market.
• looks tentatively to the next OPEC meeting, where a decision on possible cuts to oil supply could make or break the near-term future of oil supply.
• Prices continued to rise throughout the week on increasing optimism that Russia and Saudi Arabia will resolve their current oil price dispute that has seen prices fall under $23/bl in recent weeks.
• The cuts to oil supply could be by as much as 10-15mn bpd.
• This cut may not be enough, with some forecasts projecting that oil demand could drop by as much as 15-20% (15-20mn bpd) by the end of April, with these cuts still leaving a significant oversupply of the commodity in the market.

• API 2 coal followed oil and increased this week, rising 1.1% to average $55.49/t, despite reduced demand for the commodity.
• Record-low LNG prices have not supported coal prices; Japan and South Korea (two of the world’s largest importers) will like look buy less coal in coming weeks as a result of cheap LNG.
• EU ETS carbon prices saw further recovery this week, mirroring gains seen in the oil market as the price of carbon rose 17.5% to average €20.37/t.
• Prices are still lower than at the same time a year ago, where carbon prices averaged €25.36/t.

Wholesale price snapshot