State of the Energy Market – 17th March 2022

Daily Updates

Under the current circumstances, it’s hard to predict the future of the energy sector, but we can be certain that it will look significantly different than it does now. The energy supply reshapes international trading relations, as the Russian gas deliveries to Europe via the Nord Stream 1 pipeline declined, while reverse flows on the Yamal-Europe pipeline eased, and nomination for pipeline flows via Ukraine increased. 

Gas

Wholesale gas prices fell again on Wednesday with April 22 closing at 240.81 pence per therm down by 11% on the previous day’s close. Prices initially opened strongly up this morning on the news
that Russian gas flows have declined further and gas flows from Norway are also down today. However, as the day has progressed, prices have softened but the likelihood is that we will see closing prices up on yesterday.

Electricity

Wholesale power prices continued their downward movements yesterday with April 22 closing at £219.12 per MWh, down 8% on then previous day’s close. Power prices followed gas as the markets opened and we saw initial sharp increases on yesterday’s close but these have also been
declining within day.  

In other energy related news:

Trafigura, the Swiss energy company, is seriously considering reopening their Middlesbrough gas terminal. The site was closed in 2015 as it was no longer commercially viable but given current wholesale prices, that is no longer the case.

    • South Molton in Devon, which has a population of approximately 5,000, has become
      the first town in Britain to get all of it’s gas supply from renewable
      sources
      .  Energy crops, agricultural waste and animal manure are transformed by a process called anaerobic digestion into renewable gas and electricity. This provides all households in South Molton with
      renewable gas and also contributes to 40% of the town’s electricity
      consumption.
    • Estimates of what the wholesale increases mean for some well known London buildings
      have been prepared. Buckingham Palace will see an energy bill rise this
      year from £263k to £476k, Westiminster Parliament will increase from £400k
      to £700k and the Shard will increase from £200k to £350k.
    • The Norwegian state has signed off on permits which will allow Norwegian gas producers to increase the production levels at the Troll, Oseberg and Heidrun gas fields. Together with the anticipated Hammerfest LNG unit that is scheduled to come on line in May 22, these measures will help in reducing the dependency that Europe has on Russian gas.