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Supply Concerns Cause Wholesale Prices to Surge

June 2022

Market Summary

The volatility in the energy market rages on, seeing more price increases throughout June despite increased shipments in Liquified Natural Gas (LNG). Worst hit is current winter prices which have climbed the most.

Price changes seen in the gas market are being cited as a once-in-a-generation event not seen since the oil crisis of the 1970s.

On the back of this, several countries across Europe have announced that they are bringing coal-fired power stations back online which has consequently resulted in a drop in carbon prices.

Other problems with the Nord Stream gas pipeline including planned seasonal maintenance is causing further disruption to supply and future pricing concerns. Add to that the ongoing Russian energy sanctions and the likelihood of gas rationing in Europe have increased significantly.

Electricity Prices

Electricity and Gas Prices

Electricity and gas markets have been bullish throughout June showing forward curve growth of 44% and 57% respectively on winter wholesale prices.

Gas Prices

This is mainly due to supply concerns across the globe and the ongoing Russian war with Ukraine.

EPEX Price

Our flexible purchasing customers are buying on EPEX which is 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 whilst prices are so high. 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 for May is 16.23 p/kWh (commodity), and the overall rate will be 23 p/kWh+ with the non-commodity added to it.

Carbon Spot Prices

Carbon prices have been heavily impacted throughout June, dropping by 15% following various European countries turning to coal for generation to combat the immediate energy issues.

Oil Market

Brent crude oil has been bearish this month, decreasing by 4% over the month, with news of inflation and recession keeping prices at bay.

Brent Crude oil prices climbed to around $120 per barrel mid-month following tight supply and an expected increase during the summer. This should be eased by OPEC+ increasing its output from 432,000 to 648,000 barrels a day.


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