As of the 2nd of October, Gas and Electricity Year Ahead Wholesale costs were lower when compared to last month’s report.
The industrial dispute in Australia which threatened to impact on up to 7% of global LNG supplies has ended. EU Gas Storage levels have passed the 90% full target for November, currently at 96% compared to 93% last month and 88% in 2022, when there was concern that there may be Gas shortages. Any indications of extended periods of below average temperatures or Gas supply disruptions, including those piped through Ukraine, will add pressure to costs, although unlikely to be as volatile as last year.
Gas is the main source of generation, despite the growing diversity of Electricity supplies, such as renewables and connections to the continent. However, due to the lack of reliability of Wind and Solar, and not currently being able to store Electricity on any great scale, Gas generation continues to dictate the power price.
A report by the National Grid ESO highlighted that we are in a much more positive position than last year, with more Gas in Storage, Electricity generation available and additional measures to react at times of peak demand.
The Met Office forecast for October suggests temperatures are likely to be above seasonal norm.
The Energy Bills Discount Scheme (EBDS) replaced the Energy Bill Relief Scheme (EBRS) on the 1st of April 2023. It is designed to give all non-domestic customers, including the voluntary sector (such as charities) and the public sector (such as schools and hospitals) access to a phased in maximum discount when the customer’s wholesale cost exceeds the defined thresholds. This scheme lasts for 12 months until 31st of March 2024 and applies to contracts that were put in place on or after 1st of December 2021 and non-contracted arrangements. As with the EBRS, energy suppliers will automatically apply these standard discounts. The levels of assistance are less generous, but the price of Gas and Electricity is considerably lower than 2022. Those companies that are classed as Energy and Trade Intensive Industries (ETII) and Heat Networks, had to apply in July 2023 to receive a more attractive discount.
Customers may have started to see higher Standing Charges on their Electricity invoices from 1st of April 2023. There have been changes to the way some industry charges are calculated, under the Targeted Charging Review. This move is part of an attempt to recover more Electricity costs, such as Transmission and Balancing, through fixed fees. In theory this should give both the customer and the industry a more accurate way of managing finances.
Indigo Swan are working closely with energy suppliers to help all our customers understand and manage these changes.
Please contact us on 0333 320 0475 to discuss options or to get a latest update.
On the 2nd of October, the Gas Year Ahead Wholesale cost was 114.94p/th, down from 124.13p/th in last month’s report and 75% less than 2022.
EU Gas Storage levels continue to increase, now at 96% full against a November target of 90%, when it is assumed that a higher Gas demand for heating may mean Gas withdrawals. There appeared to be little disruption to LNG supplies from Australia despite industrial action, but the ending of the strikes does remove one potential concern and upward price pressure. LNG deliveries continue to be made to Europe, which are an important replacement for the reduced flows from Russia.
Although recent price movements have been far less volatile than we saw in 2022, we are still seeing some significant daily swings in reaction to a range of issues, which are impacting on customer’s budgets. Any domestic or global events which may reduce Gas supplies or increase demand, will have an exaggerated effect. It is currently being assumed that we will have seasonal normal temperatures this coming winter and that there will be no interruptions to imports into Europe or unplanned closures of infrastructure. The Groningen Gas field has now closed due to safety concerns but could be utilised for one more year in the event of a Gas supply emergency.
Energy suppliers are now offering a wider range of contracts, so we would advise discussing your options for contracts ending in 2023 or early 2024 with Indigo Swan, for both one and two years.
Energy suppliers are now offering a wider range of contracts so we would advise discussing your options for contracts ending in 2023 or early 2024 with Indigo Swan, for both one and two years.
On the 2nd of October, the Electricity Year Ahead Wholesale cost was £103.56/MWh, down from £113.21/MWh in last month’s report and 78% less than 2022.
The National Grid Electricity System Operator’s (ESO) Winter Outlook report, outlined “cautious optimism”, highlighting the improved position when compared to last winter. This includes, that there is more generation available, more battery storage and tools such as the Demand Side Response and the Demand Flexibility Service. It may also be assumed that with Wholesale prices remaining high, that consumers will once again reduce Gas and Electricity use. We are seeing an increased connectivity with mainland Europe, with Hydro Electricity coming from Norway and Nuclear from France. Coal is still being used by the ESO to balance the grid when margins are tight.
September saw 21% of generation come from Wind, slightly higher than the previous month, which allowed for a reduction in the use of Gas at 35%, down from 38%. Over the last two weeks, Wind was a high 31% of supplies and Gas a low 26%, which has helped to ease prices.
The National Grid has mechanisms in place to avoid power shortages and has taken additional steps to secure generation on demand. These measures do come at a cost, in the form of higher third-party charges within bills but provide an element of stability to prices which otherwise may react even more dramatically.
Let us know if you would like us to research your options for contracts ending in 2023 or early 2024.
Let us know if you would like us to research your options for one and two years, for contracts ending in 2023 or early 2024.
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