State of the Energy Market – 27th July 2022

Daily Updates

As expected, Nord Stream 1 gas volumes from Russia to Europe are now down to 20%
capacity. In addition, due to much reduced wind and hydro power generation, the amount of gas
being used to produce electricity has increased to over 50% in the past two days, adding greater
pressure to wholesale gas prices. 

Power

August 22 wholesale power prices increased by 9.9% to close at £352.15 per MWh.

Gas

August 22 wholesale gas prices increased by 8.6% to close at £311.25 pence per therm.

In other energy related news:

As we have recently reported, in addition to building Hinkley Point C, the largest new, nuclear facility in the UK for more than a generation (in Somerset), EDF has also been granted permission by the UK Government to build a second large nuclear facility, Sizewell C, in Suffolk. Worryingly, reports emanating from China, where EDF operates the Taischan nuclear plant, state that it has been necessary for one of the reactors there to be shutdown for maintenance following a discovery of fuel damage. The plant, which is approximately 80 miles from Hong Kong, is the first in the world to use a new type of reactor. A fuel leak has been found on this reactor and as a result, EDF have been forced to redesign the reactors they are planning to use for their British projects to ensure the same problem does not occur here. 

In an attempt to decrease its dependency on Russian gas, the EU has pushed through a requirement for all its members to reduce gas consumption for the next eight months by 15%, or a total of 45 billion cubic metres. The target is initially voluntary but will become mandatory in the case of an emergency, i.e. a further reduction in transported gas volumes from Russia to Europe. 

An interesting report on Mining.com suggests that there will be a requirement to considerably increase the mining of various materials as we continue our journey towards a renewable energy future. The report suggests that if we achieve 73% renewable power generation by 2050, compared to 20% in 2020, wind and solar will make up 85% of that 2050 number.

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