There was confusing news coming out of Russia as they declared Force Majeure on some of their gas contracts with some unnamed European counterparties, although this appeared to be backdated by a month. This normally means that situations outside of your control have arisen that prevents you from being able to honour your contract. This caused a bit of concern as markets opened this morning, was the news old and therefore no longer relevant or was Russia referring to the expected return of gas transport volumes through Nord Stream 1 later this week?
August 22 wholesale power prices dropped by 0.7% to close at £226.03 per MWh.
August 22 wholesale gas prices dropped by 3.3% to close at £193.68 per therm.
In other energy related news:
A revolutionary review of Britain’s electricity market structure, which the UK government announced today, could significantly lower the UK’s exposure to volatile global gas markets and consumers’ energy bills over the long run. Among the modifications being discussed are:
➢ separating the price of expensive global fossil fuels from the electricity generated by less expensive renewables, a move that will help guarantee that consumers will pay less because of less expensive clean energy sources
➢ modifying the capacity market to enhance the participation of low-carbon flexibility technologies that enable a cleaner, less expensive system, such as electricity storage
➢ Offering incentives for users to use grid energy at reduced prices during times of low demand or when it’s very sunny and windy will enable homeowners to save money.
• The hot weather is exacerbating Europe’s worst energy crisis in decades by straining Europe’s energy infrastructure. Due to the excessive heat, power generation is constrained since nuclear power plants struggle to keep their facilities cool and natural gas-fired power plants operate less efficiently, which causes supply to fall short of demand and makes it more difficult to restock gas before the upcoming winter. Electricity policy for the future must consider the scenarios we are currently experiencing as well as how we will deliver energy throughout the winter, with a particular emphasis on making sure the UK has the correct balance of generation for the summer.
• The Russian energy giant Gazprom has invoked force majeure on gas delivery to at least one significant customer in Europe, shielding it from having to pay out compensation for unrealized deliveries. According to Russia, the Nord Stream compressor station, for which the repaired turbine was meant, cannot operate dependably due to the Western sanctions placed on Moscow. Although the turbine is scheduled to begin pumping gas in early August, no Russian gas is presently moving via Nord Stream because the pipeline is undergoing routine maintenance that lasts until July 21. In order to avoid a winter of rationing, the EU is rushing to find alternative supplies since Germany and other EU members are worried that Russia may not resume gas production via Nord Stream after the maintenance period is over.
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