September 2021 Energy Market BriefUK Energy prices find new market highs, as prices continue their upward trend

In August, all tracked wholesale GB gas contracts rose, with the most pronounced gains observed across near-term contracts, continuing recent trends. Gas prices across the board remained comfortably above their levels seen at the same time last year, underpinned by high underlying commodity markets and tighter supply-demand fundamentals. Notably, low European gas storage levels and high gas-for-power demand supported GB gas prices.

On average, seasonal gas contracts from winter 21 to winter 23 were 15.8% higher in August than in July, with prices collectively ending the month 16.0% higher than they were at the start. Winter 21 rose 20.2% to average 114.00p/th, while winter 22 gas lifted 17.1% to 73.50p/th.

Wholesale power contracts continued to take direction from the significant gains made in gas markets, will all power contracts collectively rising in August.

Seasonal power contracts up to and including winter 23 moved higher, rising 12.9% on average in August. Winter 21 rose 17.3% to £112.38/MWh, while summer 22 rose 18.6% to £76.06/MWh. The annual October 21 power contract rose 16.9% to average £94.11/MWh.

Forward power contracts were supported by bullish gas and international commodity prices. EU and UK ETS prices remained high in August, supported by continued tighter European gas markets and lower EUA auction volumes throughout August.