28th of February 2023 Written by Lee Hart, Head of Knowhow Energy Overview Headlines: – Gas and Electricity Wholesale prices are lower. – EU Gas Storage levels are high at 62% full. – Large numbers of LNG shipments to Europe. Since our last Energy Report, Gas and Electricity Year Ahead Wholesale prices are lower. The healthy Gas supply position continues to contribute to the downward price trend, despite the lower temperatures increasing demand. EU Gas Storage levels remain high at 62% full, compared to 64% last week. This is much higher than had been feared and provides some confidence that the target of 90% full by November can be reached, in readiness for the winter. Large numbers of LNG shipments are still being made, and the US Freeport LNG terminal has partially returned to service, which may help reduce the demand pressures expected from Asia. Over the last week we have seen an increased contribution of Gas for generation, at 42% compared to 29% the previous week. This is largely due to a reduction in Wind at 22% from 34%. Imports of Electricity from the continent are high, partly due to the return of French Nuclear assets, after extensive maintenance. This reduces some of the burden on the UK to generate high-cost Electricity at peak demand. The National Grid has measures in place to react to any Electricity supply shortages, which includes placing Coal assets on standby. The government has announced that the Energy Bills Discount Scheme will replace the current Energy Bill Relief Scheme, from 1st April 2023. Please see our Blog for more details. Despite the lower costs, there continues to be some volatility, which may be exaggerated should there be another significant global event or an escalation of the conflict in Ukraine. 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. Read the full report below
