April 2023 Energy Market BriefPrices continue to slide

In Mar23, we observed notable losses across all tracked NBP gas contracts in the month, extending the bearish wholesale pricing sentiment that has transpired in 2023 to date.

Furthermore, seasonal gas contracts from summer 23 to winter 24 were 15.5% lower in March compared with the previous month. This represents a fifth consecutive month of average losses for seasonal gas contracts. Winter 23 narrowly remained the premium seasonal gas contract, averaging 135.84p/th.

The first three months of 2023 have continued to see lowering wholesale prices. The remanence of a milder 22-23 winter season across the UK and much of north-west Europe has been a primary driver of softening prices in recent months.

We are now entering the traditionally warmer spring season too, bringing with it warmer temperatures and easing demand from gas and other fossil-fuel fired emitters called upon to meet demand, which typically represent themselves as more expensive forms of generation.

Day-ahead power prices followed the bearish pricing sentiment set from its gas equivalent contract. As a result, day-ahead power prices in March averaged £115.65/MWh.

Supporting drivers of these notable losses can be attributed to the lowering of gas prices in the UK, coupled with relatively consistent levels of wind generation observed throughout the month, albeit acknowledging wind generation was slightly lower than that of February.

Warmer temperatures also discouraged gas-for-power demand in the month.The lowering sentiment of GB wholesale power prices was observed across all tracked contracts in March. Day-ahead power prices were 17.6% lower than February at £115.65. Similarly, front-month contracts were also down 16.2% on average (April 23, £116.61/MWh, May 23, £117.62/MWh).

Seasonal power prices decreased on average by 12.5% month-on-month, with winter 23 observed as the premium market.