Energy Market Update
This Energy Market Update Newsletter aims to provide UK businesses with reasons for whole market volatility, with the ultimate aim of being able to purchase energy at the lowest price possible.
Fortunately, for all concerned we didn’t see a significant escalation in the Iran/Israel standoff. As a result, the energy markets retraced (dropped lower) last week, eroding much of the increases seen the previous week.
If you have read previous newsletters, you will know by now that I bang on about the UK energy system being in a very good place. As such, if we have an uneventful week this week then I would expect to see further softening of prices. There will be bullish pressure however (what does bullish mean?) as temperature remains below seasonal norms, as well as lower than expected renewable generation due to cloudy, low wind days. This will put a floor on how far prices will fall.
The below table provides a summary of the price changes to give you a steer on your potential renewal rates for Oct24 & Apr25 start dates.
|
22/04/2024 |
Variance over the last… | ||||
|
Gas |
indicative p/kWh |
1 week |
1 month |
3 months |
12 months |
|
Oct 24 start date |
4.50 |
-1.29% |
5.73% |
-13.40% |
-46.83% |
| Apr 25 start date | 4.48 | -2.45% | 4.89% | -14.68% |
-47.00% |
|
22/04/2024 |
Variance over the last… |
||||
|
Electricity |
indicative p/kWh |
1 week |
1 month |
3 months |
12 months |
|
Oct 24 start date |
20.36 |
-0.99% |
3.00% |
-5.24% |
-36.50% |
|
Apr 25 start date |
20.24 |
-1.28% |
2.79% |
-5.46% |
-37.33% |
With the US committing to providing a significant aid package to Ukraine, it is difficult to know how Russia will respond. It is unlikely they will lay down their arms, and possibly quite the opposite. I remain very nervous over this conflict, both as an analyst and as a European neighbour of Ukraine.
As such I continue to remain very risk averse in my recommendations. With prices in a ‘decent place’ comparatively speaking, the risk of holding off making a buying decision far out weights the potential reward in my view.
Recommendations
- October 2024 Renewals- Risk averse buyers should look at purchasing their energy now. Risk takers should look at pricing early Q2, keeping an eye out for any further conflict escalations and moving quickly if needed.
- April 2025 Renewals – Risk averse buyers may wish to look at prices sooner rather than later (mid Q2/24) and take the value on the table if you have it. Otherwise, hang on until Q3.
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