With the Governments initial EBRS Discount scheme having ended and majority of businesses now being liable for 100% of their charges moving forward, the markets have continued to fight off pressure on the forward curve and we’ve seen the October 23 electricity annual fall back to £127/mwh (12.7p/kwh wholesale aspect on electricity unit rates).

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This is still significantly higher than old market levels from 2021 and before but significantly lower than last years peak. Although £127/mwh is becoming more‘palatable’ we must remember that up until 2021, we had only ever seen the forward markets reach £100/mwh a couple of times before it returned back to normal levels of between £30-£60/mwh, so we must keep that in mind when looking at current levels. Yes, they are considerably better than last year, but they are still up to double what used to be normal. We don’t believe we will see £60/mwh and below anytime soon, but we still think we need to keep thatin mind as a future possibility again.

 

Gas is a similar picture. Yes, we are looking more attractive than a lot of the gas prices from last year, but until 2021, we were looking at gas prices of anything up to 4p/kwh and we are still (depending on the season) still looking at 9p/kwh now. Again, we must remember that although we are in a better position than last year, Europe is still fighting to source gas from alternative sources other than Russia.

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There are considerably more LNG shipments coming over to Europe and Germany has now got its LNG terminals, but this doesn’t plug the Russian gap. Putin is already stoking the fire for the October 23– March 24 supply period. He knows Europe got away with a mild winter this year and that is one of the main reasons as to why the markets did fall this winter. Should Europe suffer a cold winter this year, it could be a different picture.

 

The summer months could be friendly to the market, but we feel we do need to keep a close eye on it and be ready to move should we see things happening.

 

Energy Market Drivers This Week

 

  • 27 LNG cargoes confirmed for UK delivery in May providing comfort for near curve prices.
  • Asian spot prices easing to near 2 year low
  • Wind was lower which provided some bullish trading.
  • Hartlepool nuclear reactor came back online helping prices.
  • EU & G7 agreed to ban the restart of Russian gas pipelines should it be an option.
  • Europe also looking to reduce LNG shipments from Russia.

 

Electricity Trading Figures (Week 15/05/23 – 19/05/23)

  • The October 23 electricity annual started the week at around £125/mwh and ended the week at around £127/mwh, up £2/mwh or around 0.2p/kwh
  • The April 24 electricity annual started the week at around £124/mwh and ended the week at around £125/mwh, up around £1/mwh or around 0.1p/kwh

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October 2023 Electricity Annual

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Gas Trading Figures (Week 15/05/23 – 19/05/23)

  • The October 23 gas annual started the week at around 125p/therm and ended the week at around 122p/therm, down around 3p/therm or around 0.1p/kwh.
  • The April 24 gas annual started the week at around 130p/therm and ended the week at around 129p/therm, up around 1p/therm or around 0.03p/kwh.

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October 2023 Gas Annual

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If you have any questions on this data, don't hesitate to contact the team at Sherpa on 01514 338695 or hello@sherpautilities.co.uk