Energy Wholesale Market Review, 14 September 2018

Baseload electricity

• Day-ahead power lost 4.2% week-on-week to £66.6/MWh.
• Day-ahead prices fluctuated throughout the week but were weighed on by a significant rise in wind generation following recently low output.
• October 18 and November 18 power fell, losing 4.3% and 4.6% to £67.3/MWh and £71.4/MWh respectively.

• The annual October 18 power contract declined 2.9% to end the week at £65.4/MWh (down from £67.4/MWh).
• The contract is £5.3/MWh (8.7%) higher than the same period last month, and 49.4% above the same time last year when it was £43.8/MWh.

Forward curve comparison

Annual October Contract

Peak electricity

• Day-ahead peak power reversed the previous week’s gains, dropping 4.7% week-on-week to £70.5/MWh. This was £3.9/MWh above its baseload counterpart.
• Month-ahead peak power fell 4.9% to end the week at £72.2/MWh, £4.9/MWh above its baseload counterpart.

• Week-on-week, annual October 18 peak power decreased 2.1% to £71.1/MWh. The contract is £5.7/MWh above its baseload power counterpart.
• The contract was 8.8% above its price last month (£65.3/MWh).

Forward curve comparison

Annual October Contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

• Week-on-week, seasonal contracts were down 3.0% on average, despite all seasonal contracts hitting fresh record highs at the start of the week.
• Winter 18 power, which peaked at £75.4/MWh on 10 September, ended the week down at £71.3/MWh (down 3.4% from the previous week).

• Week-on-week, seasonal peak power contracts decreased 2.8% on average. Prices followed a decline in gas and carbon prices.
• The winter 18 and summer 19 peak power contracts decreased 3.9% and 2.7% to £78.2/MWh and £64.0/MWh respectively.

Commodity price movements

Oil and Coal

Carbon

• The weekly average Brent crude oil price rose for the fourth consecutive week, gaining 0.3% to average $78.2/bl, up from $77.9/bl.
• Prices continued to gain throughout the week ahead of the upcoming US sanctions on Iran, which has created some speculation of upcoming tightness in the market and led prices to a fresh three-and-a-half year high of $80.0/bl intraday on 12 September.
• API 2 coal rose 1.8% to average $95.9/t this week.
• According to vessel tracking data, global coal shipments have grown by 3.8% between January and August this year, up to 835.5mn tonnes.

• Average EU ETS carbon prices rose for the twelfth consecutive week, increasing 9.9% to €23.2/t.
• EU ETS carbon hit a fresh 10-year high of €25.8/t on 10 September.
• Prices fell from the high to below €19.0/t on 13 September, experiencing its biggest daily drop since 2006. Prices recovered to end the week at €20.3/t.
• Consultancy Wattsight have reforecast their 2020-2030 average EU ETS price expectations up €1.0/t to €19.0/t due to reduced competitiveness for gas relative to hard coal.

Wholesale price snapshot