Gas and Electricity Year Ahead Wholesale costs are higher than last week. They show good value compared to most of 2021 / 2022 / 2023, but are still more than double those in 2020. The Oil price is also up slightly.
The pressure on energy prices continues to grow, which is being reflected in the premium for contracts starting this winter. The lower temperatures in Europe are increasing heating demand and have reduced EU Gas Storage levels to 91% full, down 5% in the last two weeks. They remain above the target set for the start of November but are lower than 2023’s 99%. Thoughts will already be turning to the ability to refill Storage for winter 2025/2026. It has been known for some time that it is likely that Russian Gas will stop flowing into Europe via Ukraine in January 2025, when the transit deal ends. However, in the last week, there has been an additional development, as Austria’s OMV Gas company has won a legal case against Gazprom for compensation due to previous disruptions to supplies. As a result, Gazprom have stopped deliveries, although it is believed other suppliers have bought the surplus. The premium being paid for Gas in Asia has attracted LNG shipments, but they are likely to return as European costs move higher. There is also the possibility that the conflicts in the Middle East could escalate and disrupt Oil and Gas from the region.
Wind’s contribution to generation over the last week has been an improved 21%, up from 13%. Imports from Europe via the Interconnectors were also up at 14%, resulting in a lower use of Gas at 39%, which has had the added pressure from heating demand.
Some of the threats to supplies may not materialise and the more positive outlook could return, but due to the risks, we would encourage customers that have Gas or Electricity contracts ending in 2024 and early 2025, to discuss options with Indigo Swan and closely monitor the position.
If you enjoyed reading this blog, why not try one of our others:
