Gas and Electricity Year Ahead Wholesale costs are higher than those in last week’s report but are significantly lower than most of 2021 / 2022 / 2023, although higher than 2020. The Oil price is $64 from $66.
The refilling of EU Gas Storage made little progress, comparable to last year, when stocks were 69% full compared to the current 47%. The target by November is being reduced but the ability to cope, or at least the industry’s confidence that there are sufficient supplies, is the important factor. Should there be a prolonged spell of very cold temperatures this coming winter, then there could be issues. With it looking increasingly unlikely that additional Russian Gas will be available this year, Europe will need to compete for LNG on the global market. LNG prices have the potential to become volatile should demand increase or there are disruptions to supplies, as we have seen before. If the US applies higher rate tariffs, notably against the EU and China, we could once again see projections for the slowing of economies and reduced energy demand forecasts and costs.
There has been a significant Wind contribution to generation in recent days, peaking at just over 50% on Monday 26th, which contrasts with just 7% on the 20th. We normally Import large amounts of Electricity through the Interconnectors with the continent, but when we have these high levels of Renewables, they allow us to reduce our Gas generation and Export, which helps balance the network. Over the last week, Wind has provided 32% from 20%, Gas 17% from 21% and Interconnectors 13% from 18%.
It is not clear how a number of factors will influence prices, which include peace talks, Gas storage levels, EU policy decisions, tariffs and the weather. We would encourage those with Gas and Electricity contracts that are due to end in the next few months and potentially further out, to engage with Indigo Swan and monitor positions closely.
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