Energy Trends

This last week has been the proverbial “fiddler’s elbow” with wholesale prices for both gas and electricity going up and down…….

 

Depending on time and day, Carbon falling from last week’s previous peak level and returning Norwegian gas capacity have eased pricing, whilst the impact of the wind, is or is not blowing hard enough has also had a direct impact.  Less wind helps electricity prices rise…… more supports a fall.

 

An interesting trend is the resurgence of coal fired generation, caused by increasingly costly gas.  It was not so many weeks ago that as a country we were recording zero generation by coal.  Today, it is expected coal will regain a significant market share with a consequent rise in carbon emissions.

 

Discussions with suppliers suggest that there are still a significant minority of end-users signing October 1 electricity contracts.  Waiting has definitely not provided a commercial benefit.

 

However, please see the chart below from ICIS.  This ICIS index simplifies the commodity cost of electricity down to a single £/MWh cost and shows how prices have moved over the past 11 years.

 

Carbon prices reached a level not seen since 2008.  The chart below shows then we were paying around 9p kWh, whilst today the comparable figure is 7p kWh.

 

With non-energy costs representing circa 50% of total cost  could we be moving from circa 14p towards 18p kWh in the not too distant future?

 

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