Since our last Energy Report, Gas and Electricity Year Ahead Wholesale prices are lower.
Milder temperatures and the opportunity to increase EU Gas Storage levels to 64% full compared to last week’s 62%, is one reason why Gas and Electricity prices have continued their downward trend. The target of 90% by November seems to be achievable, assuming we are able to divert Gas into Storage during the warmer months. We are still receiving good supplies of LNG which are replacing some of the reduced Russian Gas flows. Energy markets are very conscious that LNG may begin to head towards Asia as the Chinese economy grows beyond expectations.
Wind’s contribution to generation over the last week fell to just 16% compared to 21% in April, requiring the use of more Gas at 39% and an increase of Electricity imports from the continent, which accounted for a high 18% of supplies. As we saw in 2022, if France has more issues with their Nuclear reactors, then imports will fall and we will have to rely more heavily on expensive forms of domestic generation. The Met Office forecast for the remainder of the month suggests temperatures will be at seasonal norm with the possibility slightly stronger winds.
Wholesale prices are currently in the region of a fifth of the peaks we saw in 2022, but still show a premium against 2020 and early 2021. It is generally considered unlikely that we will see those low levels for some time. There has been little price movement over the last four months, although there is a downward trend for annual contracts starting in 2023 and 2024. Concern remains that an unexpected event, which has not been factored into costs, could once again see increases, so we would advise discussing your options for contracts ending in 2023 with Indigo Swan.
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