State of the Energy Market – 28th July 2022

Daily Updates

After the volatility seen in wholesale prices on Wednesday, this morning (Thursday, 28th Jul) has opened relatively calmly in comparison. Prompt and curve gas prices both opened down this morning and as we approach lunchtime, prices are still showing a couple of percentage points down across the board. Power prompt and curve prices are both following in the footsteps of gas.

Power

August 22 wholesale power prices increased by 5.5% to close at £328.39 per MWh.

Gas

August 22 wholesale gas prices increased by 5.5% to close at £371.62 pence per therm.

In other energy related news:

  • The disagreement between Russia and Gazprom over the gas compressor for Nord Stream 1
    continues with both parties blaming each other over the delayed delivery of the compressor.
    Gazprom state that the compressor should’ve been returned to them in May of this year, but
    sanctions placed on Russia by the EU have led to the delays. Siemens, the manufacturer of the
    compressor and the company responsible for its repair, maintain that they have yet to receive the
    required documentation to return the compressor to Russia. Gazprom have now stated that out of
    the 5 compressors required to keep Nord Stream operational, only 1 is working at “Russian standard
    levels”, indicating further potential gas volume drops through Nord Stream 1. Siemens have stated
    that they have not been made aware of any further compressor issues. 
 
  • Liz Truss and Rishi Sunak are starting to have a shared vision on certain key energy projects for the
    UK. Liz Truss has maintained her position over fracking in the UK, that it should be a local matter for
    local people to decide, suggesting that the current moratorium on Fracking could be lifted. Mr
    Sunak seems to have come around to her way of thinking. In the latest TV debate, the question
    was asked “fracking, yes or no”, and they both replied with the same answer, “yes if supported by
    local communities”. A report in the New Statesman points out that with France renationalising EDF
    and Germany bailing out one of the largest energy companies, Uniper, with 15 billion Euros, now
    would be a good time for Kier Starmer to back the renationalisation of the energy industry in the
    UK. 
  • The latest estimates on what UK customers will expect to see from the next domestic price cap
    changes do not make for good reading. The domestic price cap on variable rates for an average
    customer went up from £1,277 p.a. to £1,971, p.a. on 1st April 2022. Based on current wholesale
    energy rates, the price cap could go up from the £1,971 to £3,500 from 1st Oct 2022 and potentially
    rise again from 1st Jan 2023 to over £4,000 p.a. 

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