State of the Energy Market – 13th July 2022

Daily Updates

There was an increases for August 22 power on Tuesday (12th July), which closed at £261.51 per MWh, a rise of 4% from the previous day’s close. August 22 gas also increased to close at 244.02p per therm, a surge of 9.8%. Tuesday saw an increase across the curve, most likely caused by low Norwegian supplies and uncertainty around the Nord Stream pipeline’s potential reactivation.

Also due to transport restrictions, various sites had to shut down, this left the British system undersupplied leading to an increase in storage withdrawals to keep up with demand and thus pushing prices up.

Power

August 22 wholesale power prices closed at £261.51 per MWh, a rise of 4% from the previous day’s close.

Gas

August 22 gas also increased to close at 244.02p per therm, a surge of 9.8%.

In other energy related news:

 We have looked a little more closely at the Norwegian gas field problem that we first reported on Monday. Norwegian gas flows to the UK today are expected to be at 44 million cubic meters (mcm), compared to 77 mcm for the same day last week. This large reduction is primarily due to the Sleipner gas field temporarily closing until reported gas leak have been safely fixed. This will leave UK gas system short today by approximately 14 mcm, which will need to covered by a mixture of storage and imports from Europe. The Sleipner field is expected to be back up and running normally on Friday but in the meantime, it is likely that we will continue to see prices
moving upwards.

Drax, the electricity generator and supplier, is looking at building the world’s largest carbon capture facility in Selby, North Yorkshire at a cost of £2 billion. If planning permission is granted, the plant will aim to capture 8 million tonnes of CO2 per annum and if all goes to plan, work will commence on the site in 2024. Drax have advised that at least 80% of the materials used in the construction will come from the UK.  

The International Energy Agency (IEA) have proposed a 10-point plan with the aim of reducing global oil demand by 2.7 million barrels per day. Prices at petrol pumps have been soaring in the last two years. The latest set of increases have added £9 to the cost of filling up a typical 55 liter family car and so the proposed plan would also help to keep costs down for consumers. Some of the main points of the plan are:
• Banning driving on Sundays.
• Reducing the speed limit on motorways by 6 mph.
• Avoiding business air travel when alternative travel is an option.
• Increasing car-pooling, where possible.
• Promoting efficient driving for delivery trucks and freight goods

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