Since our last Energy Report, Gas and Electricity Wholesale prices are lower.
Although there is a premium compared to previous years, prices have remained relatively stable through January, following the significant decreases in December. The government has announced that the Energy Bills Discount Scheme will replace the current, Energy Bill Relief Scheme, from 1st April 2023. At present, a generous discount is applied to contracts and deemed rates, whereas the new scheme will provide a modest discount when Wholesale prices pass a threshold. This will last for 12 months. Please see our Blog for more details.
The recent cold spells have increased Gas and Electricity demand, but this has been offset by the positive supply position, with EU Gas Storage levels a high 77% full. Thoughts are now turning to Storage for winter 2023/24, as injections will be required through the summer. We continue to see large numbers of LNG deliveries, which have played a significant part in replacing piped Russian Gas. The US Freeport LNG Terminal remains offline and is now likely to resume shipments in February, further improving Gas supplies into Europe.
Wind’s contribution has fallen in the last week to 19%, from an extremely high 40% the previous week. This has increased the need for Gas generation to 45%. French Nuclear availability has improved, allowing us to Import from the continent, rather than Export. To further ease supply concerns, the National Grid has measures in place to react to any Electricity supply shortages, which includes placing Coal assets on standby.
Although prices are more reasonable, there continues to be some volatility, which may be exaggerated should there be another significant global event. For this reason, we would advise looking at your options for contracts ending in 2023 and having conversations with Indigo Swan about your specific requirements.
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