Gas and Electricity Year Ahead Wholesale costs are higher than last week. They show good value compared to most of 2021 / 2022 / 2023 when we saw most of the volatility, but are still double those in 2020, prior to Russia starting to withhold Gas supplies to Europe. Oil is slightly lower.
The tensions in the Middle East continue to add pressure to prices. Energy markets not only react to military action but also anticipate retaliation. More recently, Israel’s response was not to attack Iran’s Oil and Nuclear infrastructure as had been feared, and Iran appears to want to calm the situation. In the event of an escalation then shipments of Oil and Gas through the Strait of Hormuz may be disrupted, impacting on the already finely balanced supply / demand relationships.
A number of Norwegian Gas outages have added pressure to prices as we head towards likely colder spells and withdrawals from EU Gas Storage, which remains high at 95% full. From January 2025, significant Gas imports from Russia through Ukraine will end, which means we can expect prices to react with more volatility to further supply issues. LNG shipments to Europe remain low due to global competition.
Wind’s contribution to generation over the last week has been relatively low at 22%, resulting in a high use of Gas at 35%. Electricity imports from Europe via the Interconnectors remain steady at 15% of supplies. As our last Coal power station has closed, we will no longer have that small but potentially important option.
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.
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