Wholesale Gas and Electricity prices continued to drop towards the end of last week. The 1 year April ’25 contract is now comfortably below £80/MWh for Electricity, with a small delta between 1 and 2 year contracts, but a very flat curve for 2 to 5 year terms. 

We expect volatility throughout the Winter but expect to see prices drop back further in the Spring, although the upside is likely to be limited to around 10%.

On the generation side; energy for the past week was over £88/MWh which is a significant increase on the previous week, driven by fossil fuels accounting for 43.5% of total generation. Renewables were down 20%.

Gas: Gas prices fell last Friday, caused in part by news of negotiations between Hungarian and Slovak gas companies to transit gas via Ukraine. The discussions were initiated to replace the current transit agreement that is due to end in January 2025.   Power: Power prices fell last Friday as losses in the underlying gas market influenced price direction. Torness nuclear reactor is expected to return to full capacity this week, easing demand for additional fuel fired generation.   Oil: Oil prices continued to recover on Friday after last Monday’s plunge. Prices rose with increasing tension in the Middle East, and the expectation of OPEC+ to delay production increases. US Federal Reserve are expected to drop interest rates by another 25 points and Chinese demand is increasing as September production rose by 5.4%.   Carbon (EU ETS): The ICE Dec-24 fell to €63.87/t on Friday. The contract is currently trading upwards at €64.73/t this morning.    Carbon (UKAs): The ICE Dec-24 closed at £37.89/t last Friday. The contract is currently trading at £38.28/t this morning.

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