A positive outlook continues in the energy market as UK and EU energy security strategies, Liquified Natural Gas (LNG) imports, and a mild winter impact on gas and electricity prices.
European storage currently sits at 63% which is considerably higher than the 43% 5-year average with some countries predicted to be at full capacity this year. This shows the EU energy security strategy is working which is combatting the reduction in supply from Russia which was cut to levels not seen since the 1980s following the Ukraine invasion.
LNG imports continue to top up UK gas storage levels with more due in March. The US’s Freeport Liquified Natural Gas (LNG) export facility has also received regulatory approval to partially restart commercial operations, after a pipeline rupture and explosion in June 2022. This is more positive news for the UK and Europe for the remainder of winter and for future gas storage supplies.
To insure against future energy shortages and price hikes, governments will need to keep up efforts to save energy and do more to speed up the installation of renewable energy capacity and heat pumps.
Sizewell B nuclear reactor is being switched offline for 66 days of maintenance and refuelling. This could put pressure on short-term gas and electricity supply and increase near-term contract prices.
The current government-led Energy Bill Relief Scheme (EBRS) which was announced in September comes to an end in March 2023. This is being replaced with a new, much reduced Energy Bill Discount Scheme (EBDS) for businesses, charities and public sector organisations and will run from April 2023 to April 2024.
Electricity and Gas Prices
Prices have dropped across the board again since last month which is good news for businesses.
Contributing factors have been a mixture of high wind generation, LNG imports and a mild winter which have eased demand and maintained gas storage levels.
Despite this, prices are still trading three times higher than “normal” market prices but are at much more affordable levels which is welcome news as the Government business relief scheme is set to decrease by 85% from 1st April 23.
Our flexible purchasing customers are buying on EPEX, a European auction for power. Because they auction every hour of each day, customers get the “market average” price as opposed to a fixed-term contract over eg a 12-month period. Being on this product means that you will pay the average of each day for the month and once the market falls the price will follow.
The EPEX price currently is 13.84 p/kWh (commodity). With the non-commodity added to this, the overall rate will be 25 p/kWh+.
The price of carbon credits which aims to put a price on pollution has risen five-fold in the past three years with carbon prices increasing to all-time highs of €100 per tonne. This is incentivising businesses to invest in clean energy technologies to combat the increase.
The main increase is due to politicians and policymakers continually cutting carbon credits each year which is increasing the price per credit.
Brent crude oil prices are trading lower at $83 which have been impacted by plentiful supplies, expected interest rate hikes, and renewed concerns about an economic slowdown.
OPEC has increased its oil production and raised its global oil demand predictions for 2023 based on forecast demand from China and India.
China’s manufacturing activity expanded at the fastest pace in more than a decade in February, adding to hopes that the country’s recovery can offset a global slowdown and increase oil demand.
Energy Compliance – ESOS Phase 3
Business Energy Support
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