State of the Energy Market – 13th June 2022

Daily Updates

The beginning of the week saw gas prices rising as a result of an unforeseen outage combined with planned maintenance which restricted the gas flows. While the near curve began to fall slightly in the late afternoon from this morning’s open, seasonal gas prices continued to rise due to fears of a prolonged outage at the US LNG facility.

This is causing the market to retain some of the risk seen last week, which is supporting the front Winter 2022 contract. Following suit, Power prices also opened higher, but started to decline across the board in the late afternoon, owing in part to windier seasonal average weather, which reduced gas demand for power.

Gas

July 22 wholesale gas prices dropped by 2.9% to close at 146.24 per therm.

Power

Wholesale power prices fell by 1.6%, and closed at £159.13 per MWh.

In other energy related news:

Centrica has formally submitted a proposal to reopen the UK’s largest gas storage site (Rough) in order to give the UK greater supply security, according to the Financial Times. If this goes through, it’s unlikely the plant will run at full capacity this winter.

Saint-Nazaire, the first offshore windfarm to be put into service in France has produced its first megawatt-hours. According to the partners, this is “an essential milestone in the energy transition”. Saint-Nazaire is expected to have 80 wind turbines installed by the end of the year.

The UK is close to reaching an agreement to keep West Burton, a coal-fired power plant, operating after it was scheduled to close in September. Ministers and EDF are expected to finalise arrangements this week to extend the power station’s lifetime from October to March, supplying energy to around 1.5 million homes. If finalised, the agreement will elicit a response from environmental groups concerned that the federal government is about to abandon its goal to reach internet zero by 2050. Regardless of the temporary postponement, the authorities say that all coal-fired generating units will be shut down by 2024.

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