State of the Energy Market – 26th July 2022

Daily Updates

Wholesale prices have opened up this morning with continuing concerns over Nord Stream 1 gas
volumes reaching Europe. Siemens, who are responsible for the maintenance of the 6 gas
compressors on the pipeline, have stated that the compressor that has been returned from Canada
and is currently sitting idle in Germany whilst it waits to be transported by ferry to Russia.


August 22 wholesale power prices increased by 0.01% to close at £286.70 per MWh.


August 22 wholesale gas prices increased by 2.7% to close at £320.05 pence per therm.

In other energy related news:

 Shell has signed off on a significant new North Sea gas project, which marks an about turn on the
company’s decision to move away from the UK as a country for new project developments. The
Jackdaw gas filled is scheduled to start producing in three to four years time and once running at
full capacity, it should provide 6% of the UK’s gas requirements. The project may still be at risk
because Greenpeace is intending to take the UK Government to court over it’s decision to
greenlight the project. Greenpeace believe that “the UK Government failed in it’s duty by approving
the project, even though the gas field will be particular polluting due to it’s unusually high CO2

A Business Select Committee report on the state of the UK’s energy sector has delivered a scathing
attack on the energy regulator Ofgem. In one passage, the report states, “Ofgem has proved
incompetent as the regulatory authority of this complex market, thereby costing taxpayers billions
of pounds. The scale of failure and the cost exposure to taxpayers is only comparable to the
financial crash of 2008.” It goes on to suggest that Ofgem’s lite touch approach to awarding energy
supplier licenses, led to 29 inefficient companies going bust since the start of the current energy
crisis in the second half of 2021. These failed energy suppliers have led to at least £94 being added
to each customer bill as consumers are left to pick up the tab for the failed suppliers. 

A report by Cornwall Insights suggest that the UK was very close to experiencing power cuts
during the recent extreme heatwave. Grid operators were pushed to supply enough energy to
meet the increased demand during peak periods. The extreme heat on 18th July led to power
cables swelling and caused reductions from gas fired power stations. Power cuts were only
prevented by coal fired generation coming online and last-minute electricity imports reaching us
from the continent.  

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