May has been another good month for energy prices with the downward trend continuing across most trading periods.
Strong gas storage across the UK and Europe and a steady flow of Liquified Natural Gas (LNG) cargoes is providing some level of confidence for winter 2023 pricing although built in risk still puts them at a premium.
It’s been one year since the UK stopped Russian gas supply and switched to an increase in its renewable energy production. The positive move prevented any funds to fuel the war against Ukraine whilst improving our long-term energy security and carbon emissions.
Energy Bill Discount Scheme (EBDS)
This scheme replaced the Energy Bill Relief Scheme on 1st April and provides 85% less support than before. The maximum discounts for electricity and gas will be 1.961 and 0.697 p/kWh respectively which will automatically be applied to eligible business bills.
Energy and Trade Intensive Industries (ETII)
Eligible businesses have until the 25th of July to apply.
Net Zero News
Britain’s energy regulator Ofgem has announced the launch of bids for £7 billion worth of offshore transmission assets, aimed at attracting investors. This aligns with the government’s plan to significantly increase offshore wind generation capacity by 2030.
Ofgem and Innovate UK have revealed the challenge areas for Round 3 of the Strategic Innovation Fund (SIF). The SIF aims to fund innovative projects that can speed up the energy transition to Net Zero at a low cost to consumers. The challenges focus on network planning, equitable power systems, electrification of heat and power-to-gas solutions.
Electricity and Gas Prices
Gas and electricity prices have continued their downward trend throughout May which should continue into the summer if warmer weather prevails.
Winter prices are still trading much higher than the summer, with large amounts of risk being built in due to weather and market uncertainty.
Curved prices have seen the most dramatic fall over this month with winter prices trading at a 55% premium.
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 e.g. 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 7.95 p/kWh (commodity). With the non-commodity added to this, the overall rate will be 20 p/kWh+.
A downward trend has hit the European carbon market over the last two week with prices falling from €89 a tonne to €83 a tonne. One of the main drivers of this is China’s slower than expected economic recovery from its last Covid lockdown which is affecting output and consequently the need for carbon credits.
Brent prices opened May at $79.31 and has seen a small drop to $74.75 near the end of the month.
Pessimism in the oil market is being driven by volatile demand from China who are the biggest importer of Crude oil, and steep US spending cuts.
The OPEC+ producer group are also meeting on the 4th of June to discuss whether to cut oil production further or not.
Get in touch
Our team are independent energy advisors who provide competitive gas, electricity, and water prices for commercial businesses across the region.
Our complete energy management service also includes helping businesses to identify potential savings through energy audits, tax levy rebates and grant funding. We can also help you plan for Net Zero and achieve compliance with our in-house ESOS assessment service.
Contact us for a free initial consultation about your business energy.
0114 327 2645