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2023 Review

11 January 2024

2023 Review


After the turbulence of 2022, we saw some large steps back to the path of normality in 2023. The inflated energy prices that had threatened many UK businesses in ’22 slowly subsided, and while they haven’t quite gone back to the levels we saw in the previous decade, they have seemed to head in the right direction.

The 2023 wholesale gas chart


Quarter 1

As the year began, Day Ahead (DA) gas was priced at 166.9p/therm, and the DA electricity price was £163.45/MWh. This was significantly below the peaks of 2022, but still far above historical levels. The Energy Bill Relief Scheme (EBRS) was taking some pressure off of businesses; however this was due to expire on March 31st. Worries of how businesses would cope post-EBRS were lessened as prices fell consistently throughout the first 3 months of the year. 

The Q1 wholesale gas chart

A milder than expected winter had led to consumption levels being below historical averages and thus avoiding the potential gas shortages which had been extensively written about. However, there were some shortages experienced as supermarket shelves looked uncharacteristically bare. Frost in Morocco and Spain had led to shortages of vegetables and – due to the high electricity cost – it was deemed not viable to make up for the shortfall using greenhouses.


After February, fears still remained surrounding gas prices and whether they would revisit their 2022 highs, at this time we wrote “With French nuclear energy returning, European storage levels at 65% (compared to 29% last year), and Germany completing construction of it’s floating LNG terminals, the outlook is significantly more positive than it was for most of 2022.” These factors did end up contributing to the falling prices.


By the end of the quarter DA gas prices had fallen to 106p/Therm, falling more than a third during the first quarter of the year. The electricity price had fallen a similar % to close the quarter at £109.70/MWh


Quarter 2

By April journalists and politicians were willing to speak about energy prices in a more positive context. Prices had continued falling and the narrative which had been dominated by pessimists in the previous months was beginning to show signs of optimism. However, the EBRS scheme was no longer providing support, and many businesses began to feel the pain of high unit rates even as wholesale prices continued to decline.



The Q2 wholesale gas chart



Ukraine, which had been key in the catalysts responsible for seeing energy prices hit unprecedented highs, began exporting electricity again, and by the end of the month we wrote:

“While there will still be risks and some caution around the gas supply ahead of next winter there is a shift in overall sentiment, with more public figures and institutions feeling comfortable enough to express their positive views. Without any negative catalysts emerging it seems likely that wholesale prices will steadily continue to drop until such a point that market confidence is interpreted as complacency.”


In May, some of the optimism which we saw in April began to be met with caution and hesitancy. OFGEM stated that they believed prices could remain high for the next 24 months and the market sentiment was suggesting we were about to see prices stabilise or head back up. At this time we stated:

 “with current wholesale prices being priced below future contracts. This shows that there is an expectation wholesale prices will rise ahead of Winter ‘23 and that we could be close to the yearly low.”


Despite these fears, the lowest gas and wholesale prices in 2023 were observed in May and early June. However, shortly after this, prices began to rise again. Disruptions to the supply of gas from Norway was seen as a key factor in these increasing prices, as well as the confirmed shutdown of gas fields in Groningen, removing one of Europe’s key contingency plans.



At the half way point of the year, DA gas prices were down to 92.6p/Therm, a decline of 12.5% during the 2nd quarter, despite being notably higher than the May lows where prices had dropped below 60p/therm. While DA electric prices had fallen to £85.83/MWh, representing an almost 50% drop since the start of the year.


Quarter 3


The Q3 wholesale gas chart



Quarter 3 saw a reversal in the trend of declining prices that had been established during the first 6 months of the year. Wholesale prices had already hit their yearly low in June, and for the remaining summer months they would slowly begin to rise.


By July, fears had started to emerge regarding the UK’s gas reserve capacity, with the market already looking forward to the winter ahead. Plans were considered to reopen disused gas storage facilities in addition to securing LNG imports for the coming months.

At the end of July we wrote:

“As we start to edge closer to winter, it seems likely that concerns about supply for the winter of 2023 will increasingly drive the price narrative. With the failure to make a new low during July it now seems unlikely that wholesale prices will go below the low of May 30th and we are likely to see steady increases for the next few months.” - This proved to be the case, as prices failed to go below the levels seen at the end of July for the remainder of the year.



In August the energy news was dominated by the threats of industrial action at Australian Chevron plants. This threatened to disrupt global energy prices as fears of LNG shortages sent prices rising. Eventually a resolution was reached and disruptions were averted, but wholesale prices still rose almost 20% during the month.


September followed the trend of rising prices seen in the previous months as disruptions to Norwegian supply further impacted the wholesale markets. Prices rose to their highest level since April during the month before subsiding by the end of the month with DA gas prices ending the quarter at 96.7p/therm, representing a small increase from the levels seen at the end of June. DA electricity prices followed a similar trend, rising slightly since the end of June with a price of £90.01/MWh.

After prices had pulled back we said:
 “we believe we have seen the market low for this year, and there are more factors that could send prices higher than factors which could see a return to the June lows. We still believe this to be the case, and that the most sensible approach would be for those on flex contracts to look at locking in a significant % of their winter demand.” - As we headed into October, prices would soon see more significant rises.


Quarter 4

Hostilities in Israel caused a sharp rise in prices during October. Initial fears that the conflict would spread across the Middle East and disrupt energy supply routes quickly proved to be unfounded, at least in the present moment, and prices steadily fell for the remainder of the month.


As we entered into the winter months, fears of cold weather causing gas shortages had been allayed by healthy supply levels been displayed across Europe. 



As geopolitical news took a back seat, the biggest factor affecting the energy markets became weather, and forecasts were starting to suggest that the worst-case weather scenarios would almost certainly be avoided as the winter would be unlikely to be colder than the average winter.


Wholesale energy prices dropped throughout November, and that continued into December. This led to DA gas prices dropping to 78.45p/therm at the end of the year, the lowest price at the end of a quarter, but still above the low levels seen during the months of May and June. Whereas DA electricity saw the lowest prices of the year come near the end of December before rising slightly to close the year at £60.64/MWh, which was over a £100/MWh decrease from the prices seen at the beginning of January.

The difference in commodity costs for a business with a 1000MWh/year consumption between the start of January and the end of year would be £100,000.  While this is the DA market and not a future's market, we could see than in the market for Winter'24 Electricity there were differences of £30/MWh just between the high point of November and the lowest point in December.  By knowing how to time the market -- or seeking advice from those who have expertise within the market -- shrewd businesses could save themselves thousands or tens of thousands by negotiating their contract at the right time.


By the end of December, fears regarding an unexpectedly cold winter had now almost completely disappeared, and attention drifted back to international conflicts and their ability to affect international supply routes. A narrative that will remain pivotal in the first months of 2024, as it seems prices are likely to stabilise or drop further so long as energy supply routes remain free from disruption.


If you would like our monthly updates and analysis on the energy news that affects UK businesses, then sign up to our newsletter here to receive copies into your inbox, or subscribe to our newsletter on Linkedin to receive notifications whenever we publish our reviews.

January 2025 Review

3 February 2025
January 2025 Review By Adam Novakovic This January saw the UK record it’s coldest night in 15 years, but there wasn’t much in the way of wind to accompany the cold temperatures of the month. This combination led to more energy being used than expected and lower-than-hoped renewable levels being recorded, as energy prices continued to rise against the backdrop of European gas reserve levels being depleted. January kicked off with the long-expected news that Russian gas supply would cease flowing into continental Europe. Whilst the cessation of this supply had been long planned for, many would have hoped it wouldn’t coincide with a cold snap hitting the continent. The lower-than-expected temperatures have led to energy consumption being higher than anticipated putting a further strain on reserve supplies. While the weather forecasts were making for dim reading, there was some positive news coming from across the Atlantic. Donald Trump -- uncharacteristically for a politician -- had followed through on his pre-election promises and lifted the freeze on US LNG exports. In addition to reallowing exports to be permitted, Trump has also allowed for new US LNG projects to be applied for, this boosts both short and long-term positivity surrounding the gas supply that can be received by Europe. With the cessation of the Russian gas supply occurring instantly from January 1 st , and the restarting of US exports being something that will likely take months before export capacity is fully ramped up, it could be a few months before the positive effects are truly felt. This would coincide with the end the European winter, so it may be the end of March or beginning of April until the market has a more positive response. However, this could also be when European nations look to begin restocking their reserves. For those with renewals in the coming 3 months, now may be the best time to seek prices, as the further depletion of European gas reserves is likely to have a negative impact upon prices. For those whose contract is due for renewal later in the year, it may be best to be patient and wait for the market conditions to change. If your contract is due for renewal later this year and you would like a reminder sent when the market conditions turn more favourable, simply email your contract end date to adam@seemoreenergy.co.uk and we will provide reminders ahead of the renewal, at times when the market is presenting favourable negotiation conditions. 

2024 Review

6 January 2025
2024 Review By Adam Novakovic In a year that began with falling energy prices, there were recurring catalysts that led to prices climbing steadily higher. Geopolitical uncertainty and the perennial threat of escalating conflicts meant fear would maintain a constant presence in the wholesale markets. We will look back at the key energy stories from 2024, and how the energy markets are likely to shape up in 2025. Quarter 1 The year began with cautious optimism as the UK’s gas reserve levels were healthy and prices for the Summer’24 season were in freefall. In February, prices pulled back to their lowest levels since 2021, and for the first time in a while, we identified that there was greater potential for upside risk than for further downward price movement: “ there now (exists) an asymmetrical element of risk should the market encounter a supply-side problem of significance. ” During February we had advised customers on flexible contracts that this was an ideal time for making purchases. March would see prices begin to ascend again as international conflict would create problems with LNG imports, and we would highlight the geopolitical risks as an area for concern moving forwards: “ fears remain and there are potential negative catalysts that could lead to prices rising further, with the main factors to watch out for being based on geopolitical unrest. “ For a business that purchases their energy in advance, this quarter was the optimal time for purchasing during 2024. In February, electricity prices for Winter’25 were down to 7.75p/Kwh, and as low as 6.05p/Kwh for Summer’25. Winter’25 ended the year with prices above 11.1p/Kwh, with Summer’25 prices exceeding 9p/Kwh. For a company that uses 500,000Kwh of electricity per month, the difference between buying at the February low point compared to today’s prices would represent a yearly saving of over £200,000.

December 2024 Review

2 January 2025
December Review By Adam Novakovic As we moved into the final month of 2024 it seemed as though Santa would be the one delivering positive news regarding energy prices. From the 1 st of December to the 16 th , wholesale gas prices fell by almost 20% and it seemed the overdue market correction was finally underway. However, the price movement for the remainder of the month was more grinch-like than anybody had hoped, as prices rose again, wiping out the decline we had seen in the first half of the month. There were 2 reasons for this rise in prices, the first reason being the weather. Initial long-term forecasts had not predicted this winter to be particularly cold, however, December saw erratic weather events and lower than anticipated temperatures. In October it had been predicted that UK gas consumption throughout the current winter would be very similar to the levels of last year. This now appears to be inaccurate as colder temperatures have led to increased consumption. European gas storage levels have dropped below 75% of capacity with the UK levels being around 55%. This does not compare favourably to last year and raises concerns of how prices could rise should there be a particularly cold January and February. Part of these concerns are already factored into the prices, but this is likely to be the largest short-term factor in energy prices.

November Review

3 December 2024
November Review By Adam Novakovic

October 2024 Review

4 November 2024
October Review By Adam Novakovic As we head into the winter months, gas prices and availability become a higher priority for many businesses and households. In this month’s review we’ll be looking at the factors set to dictate how gas prices move over the coming season. October started with fear in the energy markets as Iran launched retaliatory strikes against Israel. Worries of the conflict expanding have been a repetitive theme in energy markets for the past year and it seemed as though that was unlikely to change. The increased military activity had led to rising prices, however, as the month progressed, hopes of a possible ceasefire have increased with leadership on both sides signalling they may be willing to put an end to hostilities. How this plays out over the coming days and weeks could be a key factor in the stability of energy prices throughout the coming winter. Meteorological forecasts have now confirmed that the UK is likely to see a La Niña winter. La Niña weather patterns refer to cooling oceans and strong winds which will have an impact on British conditions. During La Niña winters it is more likely that the UK will see a cold start to winter, a milder end, and a wet Spring. A milder end to winter would bring relief and take any pressure of the gas reserves which are currently close to being 100% full. The current forecasts make it seem unlikely that a winter of sustained cold temperatures (when compared to historic averages) is forthcoming. A POWWR energy report released in October has shown that business energy spending is increasing with businesses using 4.1% more energy during the past quarter. Energy prices remain a key concern for many high-consuming industries. Since the end of February, prices have been steadily rising. The wholesale energy prices for gas on October 31 st were more than 80% higher than they were in late February. For a manufacturing business with a 3GWh summer consumption, the difference between purchasing next summer’s energy back in February compared to today, is a difference of approximately £350k.

September 2024 Review

2 October 2024
September Review By Adam Novakovic September was a rollercoaster month for UK energy prices. In the wholesale market, prices dropped 20% from the start of the month through to the 19 th , only to then rise over the final 11 days of September -- undoing much of the previous work. In this article, we will review the factors behind these moves. As mentioned in previous months, the resumption of Norwegian gas production was always set to be a boost to the markets. At the start of the month, Norwegian supplies resumed. This, coupled with the healthy reserve levels, led the markets to believe concerns on the supply-side were overstated, and this caused prices to drop. There were some temporary increases in demand as the UK entered a cold snap a couple of weeks into September, but this was a minor speed bump in the path of the descending energy prices. One of the main fears surrounding energy supply is that no deal has yet been agreed to suitably replace the Russian gas that will cease being delivered when its contract terminates at the end of 2024. So, it was a big boost when news began to circulate that Ukraine and Azerbaijan had reached a deal where Ukraine would deliver Azerbaijani gas to mainland Europe. Prices continued to sink further as news spread, and this was seen as beneficial to the supply of gas throughout the continent. However, the Ukrainian news outlet that first broke the news was forced to issue a retraction as the Azerbaijani energy ministry denied the story and Ukrainian government sources clarified that no such deal was in place. This caused prices to rise sharply as the markets now had a renewed focus on the hole that may be left in the supply-side picture when Russia’s deal with Europe reaches its conclusion. A further catalyst for rising prices then came from the Middle East. While it appeared many Arab nations had been keen to pursue a peace deal, any hopes of conflicts subsiding quickly were ended with Israeli operations targeting Iran and Lebanon. It now seems inevitable that the conflict will spread and escalate during the coming months, and the shipping of LNG to Europe will almost certainly be impacted. Whilst it is impossible to accurately predict how geopolitical events will play out, this does seem likely to be a continued source of energy price rises for the foreseeable future. During September, it was revealed that the UK has the highest energy prices of all industrialised nations, more than double the per unit cost of Portugal and more than 3 times the cost of some Scandinavian nations. In not-unrelated news, OFGEM announced that UK energy debt has now reached £3.7bn, with energy debt having grown by 50% in the previous year. For many businesses, energy spend is an increasingly large concern that has no obvious solution. If you would like to discover ways to reduce your energy spend, or ensure you aren’t paying any more than necessary, visit www.seemoreenergy.co.uk or feel free to contact me at adam@seemoreenergy.co.uk . Outlook Even though the month has ended with sharply rising prices and growing fears surrounding energy supply, the outlook isn’t all doom and gloom. Initial long-term weather forecasts have shown that – while this winter may be colder than the previous year – it is anticipated to be milder than the average winter. With reserve levels looking healthy and Norwegian gas supply resumed, there doesn’t appear to be any need for fearmongering. While prices may be set to go higher on the news of further conflicts, there are reasons to be optimistic about the direction of energy prices beyond the coming winter. In 2025 we should see more LNG available to the market as new supplies (particularly in the US and Qatar) come online. And, whilst there may have been a false-start this month, any positive news regarding the replacing of Russian gas flows would also have the potential to significantly lower prices. If your business requires advice with its energy procurement, management, or planning, then don’t hesitate to contact Seemore Energy to speak to experienced advisors who can help you with bespoke strategies and advice that is tailored to your needs.

August 2024 Review

3 September 2024
August Review By Adam Novakovic  As summer draws to an end, gas and electricity prices have been rising. Often the threat of colder temperatures is enough to create fears surrounding energy demand, but this year the reasons for rising prices have little to do with predicted winter usage. This article will cover the stories behind why prices rose throughout August and look at which factors are likely to impact energy prices for the remainder of 2024. Wholesale energy prices peaked on the 10 th , shortly after Ukrainian forces had crossed Russian borders and captured the Sudzha gas metering station. Initially, there were fears that fighting near the station may have caused structural damage that could impact the flow of gas into Europe. The Sudzha station is part of the only pipeline importing Russian gas into the continent, responsible for the flow of almost 15 billion cubic meters of gas per year. In spite of Ukrainian forces taking control of the station, gas flows have been reported to be unchanged, although it has spiked fears regarding the vulnerability of the pipeline. Further east, conflicts between Israel and a number of neighbouring countries have become increasingly concerning. With Iran being dragged further into the conflict -- raising concerns of prolonged hostilities in the region -- there are growing worries about the safety of LNG shipments passing through the strait of Hormuz . These fears have been keeping prices high for the past few months and until the conflict looks closer to being resolved, this is a theme likely to be re-visited for the rest of the year. Even further east, Japan and China both logged record temperatures this summer. This heatwave has led to an increased LNG demand, increasing global prices as multiple nations bid for the available supply. This has contributed to the high energy prices in the UK, but is unlikely to be a factor that has a long-term impact, especially as global LNG supply is set to increase over the coming months and years. In recent years Norway has become the number one exporter of gas to Europe. However, in August, Norwegian gas fields entered a period of crucial maintenance work. This leads to a daily reduction of gas flow into Europe that is the equivalent to France’s daily gas consumption. Whilst the maintenance is essential and had been planned far in advance -- given the factors affecting supply from other parts of the world -- the market has been sensitive to the reduced Norwegian gas flows. These are set to continue into September, although normal service should be resumed before the end of the month. Outlook Looking ahead, Cornwall Insight’s forecast for energy prices has predicted that prices will remain above the pre-2022 levels for the foreseeable future. They believe the current trend of energy prices will continue into 2025 and beyond, with geopolitical unrest being a key driver behind prices. In the coming month we can expect to get the first long-term weather forecasts that will give an indication as to how cold or mild this winter is anticipated to be. With gas reserves still at very healthy levels, anything other than a particularly cold winter would likely be positive for energy prices. As with the majority of 2024, international conflicts impacting energy production and shipping are likely to be the main factors behind short-term price movement. However, with the Asian heatwave becoming less of a factor, and Norwegian gas flows expected to resume normal service, we should see prices start to drop towards the end of the month. Whether this begins a more sustained downtrend will likely depend on the development of the previously mentioned conflicts. If your business requires advice with its energy procurement, management, or planning, then don’t hesitate to contact Seemore Energy to speak to experienced advisors who can help you with bespoke strategies and advice that is tailored to your needs.

July 2024 Review

2 August 2024
July was a month that saw a combination of the familiar and the new. England failing to win at a major football tournament, and a new government taking power. The continuation of narratives that have been catalysts behind energy price moves for most of the year, and fresh challenges that have impacted the global gas supply picture. The month started with some positive news. With Gazprom contracts -- that are vital to central and Eastern European countries – due to expire at the end of this year, there have been concerns about how this supply-shortfall could be filled. So, it was a boost when Ukraine announced that they would be able to assist in sending Azeri gas through their pipelines. This eased some fears, but the story is still developing, and there are worries that this could be a way of disguising Russian gas shipments to get around embargoes. A major threat to the global LNG supply came from the US. The 130km/h winds of Hurricane Beryl hit Texas after the first week of July, causing the Freeport LNG facility to ramp down production. This ramp down led to Freeport producing at levels significantly below capacity for over a week. This did have a negative impact on wholesale gas prices, but more alarmingly shows the vulnerability of relying upon US shipments. Beryl was a category one (the lowest of 5 levels) storm, and forecasters are warning that the upcoming hurricane season could be a particularly bad one. The bad news wasn’t just coming from the west in July. As has been a recurring theme this year, conflict in the Middle East played a large impact on prices as they began to rise. Israel launched significant offensives across the region, likely dragging Iran deeper into the conflict. It now seems inevitable that LNG shipments from the region will be impacted as this conflict looks set to grow throughout August. And closer to home there were issues with EDF’s nuclear reactors. Production was cut at the end of the month due to elevated water temperatures. For now, this is a small issue that may not impact prices, but if the water temperature forces a more sustained closure, then it could become a point of concern. Outlook While the news in July wasn’t the most positive, the outlook for coming months has a lot of factors that could see prices drop further. European gas reserves are now approaching 85% full. This is very high for this time of year and will likely mean there is no unexpected European buying pressure as we go into the colder months. A potential problem that could impact prices in August is the Norwegian gas fields scheduled maintenance. The maintenance operations are scheduled to begin in August and continue into September, although some experts are predicting that the current gas reserve levels should prevent the maintenance projects from having a serious impact on prices, as they had done in June. July also saw Greg Jackson, CEO of Octopus Energy, give a prediction that would have been pleasing to all Scottish energy consumers. He believes that if OFGEM regulatory changes are implemented, Scottish homes and businesses could receive free electricity during times of high winds. Currently, wind turbines shut down when there is an excess of supply to the grid, but a change in the way the grid is operated, and the introduction of dynamic pricing could see free energy during periods of high production. While there is no time-period outlined for when this could take place, we are likely to see more regional pricing become commonplace in the coming years. How energy prices move in the coming month will likely depend on the geopolitical situations in the Middle East, and whether the fears surrounding the temporary reduction in Norwegian output will outweigh the confidence in the high European reserve levels. Keeping an eye out for long-term weather forecasts will also be prudent. If your business requires advice with its energy procurement, management, or planning, then don’t hesitate to contact Seemore Energy to speak to experienced advisors who can help you with bespoke strategies and advice that is tailored to your needs.

June Review

3 July 2024
June Review By Adam Novakovic The summer is now underway, with disappointing weather and England under-performing at a major football tournament, it may be understandable if a sense of déjà vu is in the air. This nagging sense of familiarity extended into the energy markets, with the major narratives impacting gas and electricity prices echoing the news of previous months. Wholesale energy prices stayed range-bound as indecision reigned in the markets. Traders seemed uncertain whether now is the time to submit buy orders or to be more cautious, and this led to prices remaining stable throughout the month. One of the major stories – which now seems to be a monthly occurrence – was unexpected outages impacting Norwegian supply. The Sleipner Riser connection hub suffered an outage at the beginning of the month, impacting supplies of LNG being delivered to the UK and mainland Europe. This news caused a small jump in gas prices and further highlighted the dangers of being reliant on gas imports. Norway was not the only country dealing with supply disruptions during June. The Chevron-owned, Australian Wheatstone LNG facility suffered a 2-week outage due to unexpected repairs. This facility is largely used to supply East Asia, and -- with numerous parts of Asia facing increased energy demand as a result of heatwaves -- the LNG market has become more competitive. The combination of increased demand and supply issues might be the primary factor for keeping prices at their current levels. With concerns about supply from the Middle East beginning to fade, it would have been reasonable to expect energy prices to fall if not for the complex supply/demand relationship being exacerbated by these issues. It would be no surprise to hear that small businesses are concerned by the prospect of rising energy costs. A recent survey by the Federation of Small Businesses confirmed that more than half of small businesses surveyed were worried about rising energy costs in the coming years. With energy costs having a significant impact upon the bottom line of many businesses, it has never been more important to ensure you are not paying more than necessary. If you would like a free market review drawn up for you ahead of your next renewal, email Adam@seemoreenergy.co.uk and we can have a market comparison prepared, allowing you to see which options would be best for you. Outlook Cornwall Insights lowered their price predictions for energy costs in the final quarter of this year. However, it does still represent an increase on their 3 rd quarter predictions. It is normal for there to be seasonal variation and for prices to rise in winter when there will be increased demand. Last year, prices fell into winter as Europe has gas reserve levels at near capacity. This has been achieved through purchasing between periods of heavy demand. This year, it appears that this may be more difficult to achieve due to increased Asian demand. If storage levels are not at the same levels as last year, we may see price spikes in December/January, spikes that could become more significant should weather conditions be worse than anticipated. If your business requires advice with its energy procurement, management, or planning, then don’t hesitate to contact Seemore Energy to speak to experienced advisors who can help you with bespoke strategies and advice that is tailored to your needs.

May Review

4 June 2024
May Review By Adam Novakovic, Energy Markets Consultant In a month that saw the football season draw to a close with a surprise result in the FA cup final, there were surprises in the energy markets as prices continued to rise despite most European countries currently boasting healthy gas reserves. The month began with the Viking Link interconnector – which transports gas between the UK and Denmark – receiving a Guinness world record for being the longest land and subsea High Voltage Direct Current interconnector. However, the supply of gas from Scandinavia to the UK proved to be a negative story throughout the month. Norwegian gas fields: Kolsnes, Troll, Gassco all suffered from lower output due to maintenance during May. The timely resumption of production following maintenance has been historically described as “unreliable”, and the market responded with caution as prices steadily rose. The quick return to normal production levels will help to restore confidence in the market, but any further negative news is likely to be met with further rises in price. Closer to home, there was more negative news on the production side. In recent months UK energy production has dropped 6.8% when compared to the previous year. A large part of this is due to the increased focus on renewable energy sources. We also saw strikes announced at the Dounreay power plant in Scotland, which is set to contribute towards lower production levels in the UK. Another factor contributing to the rising energy prices has been due to changes in demand in the LNG (Liquified Natural Gas) market. Extreme temperatures in Asia have led to an increase in LNG purchases. This has occurred at the same time power issues impacted LNG production in Malaysia, and production was halted at an export facility in Australia. The only positive during this time was the Freeport facility in the US returning to full capacity and helping somewhat ease the strain in the LNG market. Further pressure on the supply of energy to Europe came from Austria. While many European nations stopped receiving gas from Gazprom in 2022, Austria continued to import gas from the Russian company. However, it now seems as though the Austrian government will look to end their reliance on Russian imports in a move that could have a ripple effect on gas prices throughout Europe. As in previous months, geopolitical instability is still a key factor in rising energy prices. Concerns about the Russia/Ukraine conflict persist, and new fears have emerged that Iran could block shipments passing through the Strait of Hormuz. 20% of the world’s LNG exports pass through the strait, with the UK being reliant on imports from Qatar. If this problem worsens, it will put further pressure on the LNG market and lead to prices rising further. Domestically, a study conducted by Centrica has shown that energy costs are still a big concern for UK businesses. One third of businesses surveyed stated that unpredictable energy costs have limited their growth in the past year. More than half of UK businesses are now looking at onsite generation as a way of helping reduce their energy costs. If your business is struggling with energy costs and you would like to talk about the options available to you, send me an email ( adam@seemoreenergy.co.uk ) and we can discuss the methods available to help lower your energy spend. Outlook OFGEM lowered their price cap for the 3 rd quarter of 2024 by 7%. Despite the factors that have negatively impacted prices in the last month, this shows there is still a consensus that prices will continue to drop for the remainder of the year. Consultancy firm Cornwall Insights also predicted a drop in energy prices during the coming quarter. Additionally, they foresaw a small price rise in October, before a further drop in January of 2025. Although it should be noted that they acknowledged the unpredictability of the energy markets at this time. One of the main factors that will affect prices in the coming month will be how quickly full production can be resumed in Norway, with less downtime for maintenance expected in June than in May. If full output can be quickly resumed and the LNG market doesn’t suffer any further issues with supply then it’s likely prices will fall, however, news out of the Middle East should be watched closely, as further disruptions to imports from Qatar could see prices rise further. If your business requires advice with its energy procurement, management, or planning, then don’t hesitate to contact Seemore Energy to speak to experienced advisors who can help you with bespoke strategies and advice that is tailored to your needs.
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