Wholesale energy prices dropped by nearly 20% in the last month as increased gas supplies in the UK combined with an ongoing mild winter continued to push prices downwards.
This is according to the latest Vayu Energy Report which shows that despite this substantial drop wholesale gas prices are 29% higher and electricity prices are 23% higher than 12 months ago. Weak sterling due to Brexit has protected Irish businesses from a more severe increase as sterling gas prices increased by 43% over the same period.
Overall, Vayu expect that gas and electricity prices may drop somewhat in the coming months as the summer approaches and that the largest gas storage facility in the UK won’t start injecting gas until the third quarter.
However, there are significant concerns about this facility (Rough Storage) and if it will be available next winter. The failure of Rough Storage to come back online would have a significant impact on energy prices this winter, according to Vayu.
The average day-ahead price for gas, the contract for gas delivery tomorrow, is 1.66 c/kWh (cents per kilowatt hour) for March so far. This compares with an average price of 1.29 c/kWh in March 2016. Irish wholesale gas prices are 15% lower (in euro terms) compared with the average monthly price recorded for March over the previous three years (2014-2016).
Vayu Senior Energy Analyst, Keith Donnelly says, "We are continuing to see wholesale energy prices remain considerably higher than last year as the market recovers from a year of very low prices. The recently expanded Panama Canal now means that an increased number of Liquefied Natural Gas (LNG) tankers are coming to the UK, which impacts the price of wholesale gas. In March the very first Peruvian LNG ship arrived in the UK."
Source: www.businessworld.ie