Written by Rory Ingham- Director, Avails Energy
The general sentiment in the market is a bearish one with UK’s gas storage currently at 41% as we move into warmer weather, the reduced demand will be somewhat offset by planned gas infrastructure maintenance.
This year so far, we have benefited by extremely high renewable energy generation, as we move into summer months, we expect wind generation to fall but to be largely replaced by solar power, with an expectation of record solar generation, due to the increased installed capacity over the last couple of years.
As part of the REPowerEU initiative and the aim for Europe to move away from Russian gas, G7 has also pledged to work on the transition as soon as possible, pointing towards the importance of LNG to help do so, despite a Russian LNG Shipment due to unload its cargo at Zeebruge in Belgium on Friday the 5th of May. The G7 have also pledged to stop the use of coal in power generation by 2035
The market has been very slowly falling following a spike in April due to the escalations in the Middle Eastern conflict, the hope is that a cease fire will be announced in the coming days and weeks, which would again contribute to the bearish momentum, however the situation remains volatile and the UK energy market will react very quickly to escalations, and this situation remains the main known price risk in the market at the moment.
The average wholesale price for gas for the next 12 months is currently 76.4 pence per therm (2.6p/KWh), further out the market is very flat.
The average wholesale electricity price (baseload) for the next 12 months is currently £68/MWh (6.8p/KWh) with peak prices slightly higher at £72/MWh (7.2p/KWh)
