Since our last Energy Report, Gas and Electricity Wholesale prices are lower.
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 continued positive supply position through January is contributing to the downward price trend, as is the forecast for a period of above seasonal norm temperatures, following the recent cold spells. EU Gas Storage levels remain high despite having fallen to 73% full, compared to 77% last week. Large numbers of LNG shipments are still being made, and the US Freeport LNG terminal is likely to resume deliveries early February. Germany now has two new LNG facilities to receive deliveries, further reducing the impact of disrupted Russian Gas flows.
There was a lower % contribution of Gas for generation last week at 42% from 45%, due partly to improved Wind at 24% of supplies. With a more positive outlook for French Nuclear availability and the potential for Imports at peak times of demand, much of the concern that had been built into prices has been removed. 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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