Gas and Electricity Year Ahead Wholesale costs are higher than in last week’s report. There is a small premium for longer term contracts.
Energy markets are building in additional premiums as Russia launched attacks on Ukraine’s energy infrastructure, including power stations and Gas Storage. Also, as expected, Iran retaliated against Israel which had a limited impact and appeared to avoid a wider conflict. However, despite Israel’s influential international allies asking them to de-escalate the situation, there is a concern that they will take military action, which could mean lower Gas and Oil exports from the region and price volatility.
Wind generation accounted for a very high 42% of Electricity supplies over the last week, resulting in a reduced reliance on Gas at just 9%. Imports from Europe via the Interconnectors were also down at 13%. The milder temperatures allowed EU Gas Storage levels to increase to 62% full, on track to achieve the 90% November target. UK Storage, although far smaller, also increased. LNG shipments continue to arrive to help offset the reduction in Gas flows from Russia, since tensions began in 2021.
Temperatures for the rest of April are likely to be at seasonal norm by day, but lower at night. This may create some additional demand for Gas supplies for heating. There are a number of risks that threaten to reduce energy supplies. For this reason, we would encourage customers that have Gas or Electricity contracts that end in 2024, to discuss options with Indigo Swan and closely monitor the position.
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