Early Gas and Electricity Winter 2023/24 Outlook Reports

In June 2023 both the Gas and Electricity outlook reports were issued for winter 2023/24. These are early reports by National Gas Transmission and National Grid ESO and are based on information that is currently available, outlining the expected supply and demand positions. More up to date versions will be published later in the year.

As you would expect, it is anticipated that assuming normal conditions with some small variations in weather and supplies, we should have enough Gas and Electricity to cope with peak demands. Last winter we were very fortunate that with concern for Gas supplies, we did not experience an extended very cold spell across Europe. Although we anticipate being in a better supply position this winter, an extreme cold spell could create some challenges.

The high cost of energy had an impact on consumption last winter but not as much as had been anticipated. Some customers still had lower fixed price contracts in place from before Russia reduced Gas flows to Europe and the subsequent sanctions by nations following the invasion of Ukraine.

With Gas providing 33% of generation last winter and peaking at 58%, Electricity Wholesale prices mirror Gas. The growth of renewables does mean that we need a very diverse and creative network that copes with the large variations. National Grid ESO explains how they will continue with the Demand Flexibility Service and have Coal assets available. They also expect generators within the Capacity Market to fulfil their obligations when called on.

We are becoming more connected to Europe with Gas and Electricity able to flow either way. Europe and Germany in particular, have increased their LNG infrastructure and can now receive more shipments, which does mean the recent trend of fewer coming here for onward export to Europe, will likely continue. It is expected we will need imported Electricity, however, probably does not fully factor in a potential significant reduction in supplies, possibly due to French Nuclear assets going offline again or Norway restricting Hydro through the North Sea Link.

As Indigo Swan have been reporting, Gas and Electricity Wholesale prices for 2023 are much lower than 2022, but have remained relatively flat for a number of months, with a considerable premium compared to 2020 and early 2021. Energy markets are likely basing current prices on similar positions as outlined by these reports, which contain some optimism but also share potential concerns.

Should you wish to discuss this content or your own position, please do not hesitate to get in touch.

https://www.nationalgas.com/insight-and-innovation/winter–outlook

https://www.nationalgrideso.com/research-and-publications/winter-outlook