Movements in the wholesale energy market can have a significant impact on the electricity and gas prices businesses pay. Factors that influence these range from weather forecasts to global demand.
The gas and electricity used is the biggest cost which is then supplemented with other market costs such as network operator costs and the Climate Change Levy (CCL).
Currently UK gas storage is in high demand as we ramp up the heating to combat the colder weather, whilst short-term forecasts suggest that wind output will drop below average. EU carbon futures surged, rising above €27 following an announcement about the Oxford/AstraZeneca vaccine news which could be a catalyst for increased European demand.
Slight gains seen in price during late November driven by the emissions price rising above €27 and an increase in heating demand powered by coal generation to support low wind levels.
Gas storage remains healthy which is reflected in the lower prices seen during late November. The forecasted cooler weather and drop in wind levels does not appear to be enough to worry traders possibly owing to National Grids’ statement in October reassuring the UK that the gas storage levels are enough to get through the winter and a no-deal Brexit scenario.