Headlines:
- Gas and Electricity Wholesale prices are higher than last week
- A number of potential issues are adding pressure to prices
- EU Gas Storage levels are a positive 90% full
Energy Overview
Gas and Electricity Year Ahead Wholesale costs are higher than those in last week’s report. They remain far lower than most of 2021 / 2022 / 2023, but still more than double those in 2020. Little has changed since last week, with a high degree of nervousness continuing to outweigh what is a fairly positive current supply position.
Last year the EU’s Gas Storage reached over 99% full in November against a target of 90%, which provided confidence through the winter and resulted in Wholesale prices falling. With Storage already at 90% full, it is likely to once again reach similar levels. However, this year there are a number of uncertainties which are adding pressure to prices.
Ukraine’s recent advances have raised concern that the pipeline delivering Russian Gas into Europe could be impacted. Ukraine is also looking unlikely to renew the transit contract at the end of the year, meaning Russian supplies will need to find other routes. Tensions in the Middle East could very quickly increase, impacting on Gas supplies from the region. LNG shipments are heading to Asia due to a price premium and although this is not an issue at the moment, in the event of Gas shortages in Europe, the competition for deliveries will inevitably increase costs.
The last week has seen Wind generation fall from 30% of supplies to 22% and increase the need expensive Gas.
Some of the threats to supplies may not materialise and the positive outlook could return, but due to the risks, we would encourage customers that have Gas or Electricity contracts ending in 2024 and potentially early 2025, to discuss options with Indigo Swan and closely monitor the position.
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