Since our last Energy Report, Gas prices are unchanged and Electricity Wholesale prices are lower.
Costs for the remainder of 2022 and the first quarter of 2023 remain high. Although 2023 and 2024 show better value, there is still a premium, but does provide an opportunity to contract longer and reduce the shorter term % increases. The government’s Energy Bill Relief Scheme continues to provide a capped Wholesale cost for those that contracted from December 2021 and a discount for those not contracted. This started in October 2022 and runs until March 2023, and maybe extended for specific industries. Customers still need to monitor the markets for contracts from April 2023, when they may once again be fully exposed to costs.
Despite the cold spell and reductions in EU Gas Storage levels, they remain higher than the target set for November, and are currently 87% full. The UK’s own smaller reserves are also well stocked with large quantities of LNG being delivered. This positive position and the knowledge that next week will see milder temperatures, has helped prevent a price surge, which was expected in reaction to the increased heating demand.
Wind contributed just 3% of generation on the 11th and 12th, and just 15% so far in December, compared to 30% last month. With an increase in demand, the National Grid almost used additional Coal power stations to balance the network, but this proved unnecessary. France continues with the repairs to large numbers of offline Nuclear reactors in the hope of avoiding power shortages and allowing the potential for exports to the UK.
There remains the possibility of price volatility due to a great deal of uncertainty. Therefore, we would advise looking at your options for contracts ending in 2023, having conversations with Indigo Swan about your specific requirements.
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