Despite a decrease in Langeled flow and the continuation of substantial exports to the continent, the gas and power markets have traded lower today (26th May 2022), undoing some of the previous gains. European gas storage is at 44%, up 8% from last year, and this, combined with strong wind output, which is reducing gas for power demand is helping the market to mitigate some of the risk.
June 22 wholesale gas prices closed at 148.88 pence per therm on Tuesday, which was an increase of 9% against the previous day’s closing price.
Wholesale power prices for June 22 closed at £157.59 per MWh, which was an increase of 4% against the previous day’s close.
In other energy related news:
- The Chancellor Rishi Sunak has today announced support for UK households struggling with the cost of living crisis. In total, a package totalling £15 billion will be made available, which includes a £400 discount on energy bills for all customers and a one-off payment of £650 for the poorest 8 million households. £200 from the £400 mentioned has already been credited to customer bills in the form of a loan, which was due to be paid back by consumers to their energy suppliers over the course of 5 years. However, the Chancellor has announced that the £200 payment will now be a grant instead of a loan and so consumers will no longer need to pay it back. In addition, a further £200 grant will be paid to all customers by energy suppliers. The Chancellor has also announced that he will be imposing a windfall tax on energy suppliers that have benefitted from the recent extreme increase in wholesale prices. The windfall tax is seen as a temporary measure and, in an attempt to not deter further investment in the sector, the Chancellor has stated that the tax
on suppliers will only last as long as wholesale prices remain high. It is expected that this tax will help to generate at least £5 billion, which will help to pay for the £15 billion package. Other measures include a payment of £300 for pensioners that receive Winter fuel payments and a one-off payment of £150 to customers that receive disability benefits.
- Due to stormy weather spinning turbines around the country and out at sea, UK wind power production achieved a new high on Wednesday. It was enough to meet more than half of Britain’s electricity demands, demonstrating the potential for green energy to replace expensive fossil fuels while also providing good news for countries trying to transition away from Russian energy. Records will become more prevalent as the UK’s wind-farm capacity grows.
- In October, Shell’s bid to develop a North Sea gas field was denied by the UK’s Offshore Petroleum Regulator for Environment and Decommissioning (OPRED) on environmental grounds. Shell then submitted amended plans for the Jackdaw field to OPRED in March, and it is now anticipated to be approved in the coming days after no serious concerns were expressed during a public consultation period. If the plan is approved and Shell decides to proceed with the final investment decision, the gas field will contribute 6.5% of Britain’s gas output by the second half of 2025, according to the new plan.
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