October 2021
Market Summary
Finally some positive news, as energy prices over the last week saw huge reductions, with the biggest gains seen in gas. Electricity markets have also started to ease, with December forecasts dropping by almost £90 per MWh.
Much of this movement is fuelled by an improved supply from Russia who have just agreed for energy firm Gazprom to fill their European gas storage facilities once domestic levels are full. Further steps to approve the new Nord Stream 2 pipeline should also positively impact on power and gas markets. This should continue to ease pressures on pricing making the forecast more favourable as we head into winter.
Longer term, the UK government has recently proposed the Nuclear Energy Bill to attract a wider range of private investment into new nuclear power projects, cutting the cost of financing them and reducing the cost to consumers. Large scale nuclear power is the only technology available to provide continuous, low carbon electricity and has key role to play in reducing UK’s dependency on fossil fuels and exposure to volatile global gas prices.
Carbon Spot Prices
Carbon prices have been volatile due to UK power coal stations being commissioned to to combat the energy crisis. This month we have briefly seen highs of €65 p/tonne before retracing back down to €58.
Electricity Market
Short-term electricity prices reached new highs earlier this month, with November prices trading at £285 MWh. Fortunately the market has made some recovery over the last three weeks resulting in significant falls, with electricity dropping by over 38% and December’s price trading currently at £177 MWh.
Gas Market
Short-term gas prices reached new highs this month with November prices trading at 303p/therm (10.3p/kWh). Gas saw even bigger falls than electricity, with prices dropping by over 45% and December’s price trading currently at 165p/therm.
EPEX Price
We buy power for our flexible contracts 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. As the markets fall so will the price of energy for clients on this kind of arrangement.
The EPEX price currently for October is 18.14 p/kWh (commodity). With the non-commodity added to this the overall rate will be 25 p/kWh+. The EU price has outperformed the UK market this month.
Oil Market
Oil has been volatile over the month, reaching highs of $86.61 p/barrel which has pushed both petrol and diesel costs up to heights not seen since 2012. Over the past couple of days prices have decreased by 5% reaching $82.70 following news that Iran may restart nuclear talks next month. Analysts are predicting that oil will remain in the £80 p/barrel range due to the winter approaching.