An organisation that helps secure energy cost certainty for schools via collective purchasing has released a new energy market report.
The latest report from Utility Aid, which is one of the BSA’s Certified Suppliers, reveals how gas is still driving electricity prices.
The report says: “Even though the UK is generating more electricity from wind and solar, gas-fired power stations still play a major role in setting the wholesale electricity price.
“Renewables are helping to reduce the size of price spikes, but they haven’t removed the influence of gas from the market.”
Utility Aid goes on to explain that gas supplies are getting tighter as the UK heads into winter, with a continued reliance on a combination of LNG, gas storage and imports through pipelines during winter. The report highlights various concerns:
- European gas storage is 12% lower than this time last year
- UK storage was only 32% full at the beginning of September
- Supply of LNG from Qatar has been disrupted by the situation around the Strait of Hormuz
- Competition for available LNG from Asian markets is keeping pressure on prices
“The increased capacity at Norway’s Troll gas field is a positive development, but it doesn’t remove the wider supply risks,” the report says.
“What does that mean for electricity? Because gas still influences the wholesale electricity price, gas market volatility can feed directly into electricity prices.
“Wind and solar are helping to soften the peaks, but electricity prices can still rise sharply when the market is under pressure – particularly during periods of high winter demand.
“A cold snap would increase demand for gas and put additional pressure on already lower storage levels. That means the market could become more volatile if temperatures fall significantly.
“The outlook isn’t necessarily about prices going up every day. It’s about the risk of prices moving higher and becoming more difficult to predict.”
The report concludes: “Tthere is no way to know exactly where energy prices will be in the future. What we do know is that the market is currently facing significant supply and geopolitical uncertainty, with winter approaching and gas storage lower than last year.
“If your contract is coming to an end, securing your energy now can remove some of that future price uncertainty rather than leaving your organisation exposed to whatever happens in the market between now and then.”
The full Utility Aid report can be read here. Find out more at www.utility-aid.co.uk.
Categories: Sector News
