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30/08/2022 - Weekly Wholesale Market Update

Updated: May 2, 2023

This morning, the Electric wholesale (Day Ahead) prices have opened up 9.71% Lower than this time last week with Gas (Day Ahead) 4.50% lower.


The European Commission has promised an urgent overhaul of the power market that will take place "in a matter of weeks" as the German power market crosses the €1000/MWh threshold. Even though the redesign wouldn't happen until the beginning of next year, it is incredible to see the EU taking the initiative. In order to prevent gas-fired power plants from setting prices, Ursula von der Leyen stated the basic shape the reforms will take: disconnecting gas from the market while "developing a mechanism that allows the cost advantages of other forms of energy to reach consumers."


Until "we have established and implemented the (new) market design," the EU may impose a windfall tax to syphon off extra profits from enterprises and give relief for families and businesses. The idea of immediately overcoming the energy issue has been dubbed a "dream" by the CEO of Shell, who also predicted that the continent will struggle to fulfil demand for several more winters. Since Nord Stream 1 will be completely down starting tomorrow, new worries have been raised about the Russian supply simply ceasing to flow for the foreseeable future.


Germany is likely to meet its storage goals earlier than planned, which could be bad news for the market. Additionally, the Belgian government labelled the European power market a "failure" and backed "urgently needed reforms"; as a result of the market's uncertainty regarding the form that government intervention will take, profit-taking and the liquidation of some longer-term positions are likely to occur. With its unique gap on gas prices for power generation, Spain is currently benefiting from electricity rates that are two to three times lower than those of other EU countries.


Meanwhile, France issues a warning that if businesses do not create energy-saving strategies, there would be "brutal cuts" in gas supply this winter. The mixed outlook causes a significant bid-offer spread on the UK market this morning, with Nov. 22 being offered for £900/MWh and W. 23 being bid at £400/MWh with a £190/MWh discount. While flows in Norway are reduced by 10mcm due to unforeseen interruptions, the day-ahead market only declines by 5%. Dutch TTF front-month steps down by 19 percent, and we will see UK markets try to capitalise on this today across European energy markets. Carbon was similarly discounted by 0.18 percent while Brent fell by 0.23 percent.



How the market has opened each day:

DAY AHEAD PRICES

Gas (pence per therm)

Electric (£ per MWh)

22/08/2022

500.00

515.00

23/08/2022

472.90

514.00

24/08/2022

499.50

529.00

25/08/2022

544.00

585.00

26/08/2022

600.00

600.00

30/08/2022

477.50

465.00


7 day averages


Electric (£ per MWh) 534.67

Gas (pence per therm) 515.65


The below shows how the market compares to the previous week, month and year.





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