Gas and Electricity Wholesale costs are slightly higher than last week.
The energy markets are still factoring in the potential for up to a 7% reduction in global LNG supplies due to the strikes at Australian facilities, although so far there appears to be little disruption. With Asia being the main market for Australian LNG, there may be an increased demand from other sources, such as Qatar and the US, adding further pressure to prices as we head towards the winter. EU Gas Storage levels are 94% full, already exceeding the 90% target for November, limiting the strike’s impact. The Groningen Gas field is due to close by the 1st of October 2023, earlier than expected due to safety concerns. The Dutch government has said it could be utilised for one more year in the event of a Gas supply emergency.
Electricity prices continue to follow Gas, as Gas remains a major and reliable source of generation, although at a reduced 36% of supplies over the last week, compared to the previous 49%. This was largely due to an improved Wind contribution at 19%, which is likely to be even higher this week. Imports via the interconnectors supplied 12% and Coal continued to be required.
There has been little price movement in 2023 compared to 2022, but they remain stubbornly high with little indication that this will change in the short term. Energy markets are overreacting to any industry supply issues which could potentially mean a period of volatility through the winter. For this reason, Indigo Swan are advising customers to review contracts that end in 2023 or early 2024.
If you enjoyed reading this blog, why not try one of our others:
