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8% Drop in Irish Wholesale Gas Prices in September Compared with Last Year

  • Gas inventories across Europe down significantly despite robust supply
  • 13% drop in Irish wholesale electricity prices year-on-year
  • 17% of total electricity demand in Ireland met by wind energy so far this month.

Monday, 28th September 2015: Irish wholesale gas prices are 8% lower on average in September compared with September 2014 and 2% higher compared with last month, according to the latest Wholesale Energy Market Report published by Naturgy Energy. The company, which supplies gas to over 20% of Ireland’s industrial and commercial market, states that the year-on-year decrease in prices is due to an increase in pipeline gas supplies and a positive outlook for Q4.

In euro terms, day-ahead prices for gas – the contract for gas delivery for tomorrow – averaged 1.93 c/kWh in September. This compared to an average price of 2.09 c/kWh in September 2014. A fall in the value of the euro against the pound sterling over the last twelve months masked an even greater drop in prices on the UK wholesale gas market, the source from which Ireland purchases its natural gas. Prices were down 14% in sterling terms year on year.

Irish wholesale gas prices are now 21% lower (euro terms) compared with the average monthly price recorded for September over the previous three years (2012-2014). This has had a significant impact on the energy costs of many Irish businesses purchasing gas on the wholesale market, particularly in the industrial and commercial segment.

Gillian Lawler, Senior Energy Analyst at Naturgy notes that Norway continues to surprise the market with production and exports far exceeding forecasts. This has offset significant restrictions on Dutch gas production and contributed to a fall-off in shipments of LNG (liquefied natural gas) into Europe from the Middle East. So far this year, Europe has experienced a glut in LNG supply with shipments contributing approximately 20% of daily demand requirements during September.

Despite the robust supply levels, inventories in major European storage hubs are down significantly compared with last year. While injections into storage usually commence in April, this year most facilities waited until July before replenishing inventories when cheaper oil-indexed gas became available. UK storage levels currently stand at 79% capacity compared with 100% this time last year.

Commenting on the low levels of gas storage, Ms Lawler states: “While gas inventories are significantly down across European hubs, such as the UK and Germany, this is not proving to be a major cause for concern at the moment. We’re seeing a flexible supply picture in Europe with strong gas exports from Russia forecast for Q4, a surge in flows from Norway and a healthy LNG supply line from the Middle East. At the current time, it’s difficult to see a significant increase in price short of a weather-related boost in demand.”

Electricity and Renewables Update

The average wholesale price of electricity in the Irish market for the month of September was 4.88 c/kWh – a decrease of 13% compared with September 2014 and 4% lower compared with last month. The year-on-year decrease is attributed to strong wind generation and lower prices for gas, which is the main energy source used to generate electricity in Ireland.

Total wind generation capacity in Ireland now stands at 3,025 MW. During September, wind energy accounted for 17% of overall electricity generation in Ireland. Wind generation during the month reached a peak of 1,702 MW on the 12th of September when it accounted for 47% of demand at the time. Some 21,740 gigawatt hours (GWh) of wind energy has been generated in Ireland since the start of the year, representing 22% of total electricity demand for the country during this period