The outlook for the UK ETS this week is neutral to bullish. May Day on Monday makes a short week, while gas fired electricity remains the predominant source of power, so we’ll get five days of hedging squeezed into four business days. Wednesday brings another UKA auction, for 3.221 million UKAs. If utilities are still interested in swapping EUAs to UKAs, we might get some degree of price convergence, with EUAs trading around £70 vs. UKAs which closed on Friday at £80.75. Mild temperatures should limit heating and power demand, but low wind levels and cloudy conditions to come will also limit solar energy production. The gas price situation could also prompt volatility, but we’re unlikely to see any major developments until after payments are due next, around 20 May.

UK ETS Outlook: neutral to bullish

Indicative UKA price: £81.30

YTD average UKA price: £78.61

April average UKA price: £77.89

 

1. UKA Dec22 Price Chart 2. Snapshot of UK energy generation 02/05
from grid.iamkate.com

 

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