Headlines:
- Prices are slightly higher than in last week’s report
- Impending US tariff announcements may impact on costs
- EU Gas Storage levels remain very low at just 61% full
Energy Overview
Gas and Electricity Year Ahead Wholesale costs are higher than those in last week’s report but are significantly lower than most of 2021 / 2022 / 2023, although higher than 2020. Oil is also higher at $69 a barrel.
Since the two-week period of price volatility caused by the conflict between Israel and Iran, energy markets have been relatively stable. The conflict illustrated the exaggerated reaction if there are just possible impacts to supply or demand. Following a 90 day pause, the US is now looking to impose new trade tariff rates from the 1st of August, which could once again see price movement if the outcome is thought to impact on global economic growth.
EU Gas Storage is slowly being filled but remains very low at just 61% full compared to 79% last year. With less Gas being available from Russia following the end of the Ukraine transit deal in January 2025, large quantities of LNG will be required. This means competing with Asia for shipments, which has the potential to inflate costs.
The Electricity Wholesale price continues to follow Gas due to its high cost and use for generation. Over the last week Gas contributed 23%, up on recent weeks, as Wind fell to 24%. Imports were stable at 15%. With increasing amounts of Renewable assets being built far away from the areas of demand, and with the infrastructure not currently able to transport it all at times of peak generation, large sums of money are being paid to switch it off to protect the network. This cost and the investment needed to move Electricity long distances are being recovered within customer’s energy bills and are likely to increase. The government is currently looking at Zonal pricing as a potential long-term solution.
We would encourage those with energy contracts ending in the next few months and potentially further out, to engage with Indigo Swan and monitor positions closely.
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