After the relative calm of the last few days, the market reacted on Thursday and saw some significant gains, notably on terms over one year. There is clearly a lot going on geopolitically, and at this moment in time, we just need to allow the market to respond.

On the generation front, the generated price of electricity was £80.18 per MWh, which was an increase from last week and is indicative of the stresses in the current market.

Even though renewables made up just under 40% of generation last week, the wholesale price continues to be governed by the most expensive single element in any week’s generation mix — and that will always be natural gas. There is a lobby to change this so that the wholesale price reflects the actual production cost, but there is limited appetite at the regulator level for this.

Gas: Gas prices surged yesterday as geopolitical risk drove the market upwards. Prompt prices were also supported by cooling demand for the hot weather and a short grid.

Power: Power prices tracked the wider energy complex based on the escalation in the Middle East. Fundamentals showed an increase in wind generation forecasts for next week, limiting further gains in the prompt.

Oil: August Brent crude oil futures rose to $78.85/barrel yesterday. The conflict between Iran and Israel continues to escalate, while US involvement remains uncertain, keeping investors on edge. This uncertainty was found in the market this morning as prices have already softened down to $76.97/barrel at the time of writing.

Carbon (EU ETS): The ICE Dec-25 softened to €72.74/t yesterday. The contract opened at €72.92/t this morning and is currently trading at €72.64/t.

Carbon (UKAs): The ICE Dec-25 fell to £51.67/t yesterday. The contract opened this morning trading at £52.00/t and has not yet traded further.

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