The delayed arrival of spring has led to an almost 21% drop on Irish wholesale gas prices from last month. The monthly Naturgy Energy Report for April 2018 shows that prices are 23% higher compared to the same time last year and are 16% higher (in euro terms) compared with the average monthly price recorded for April over the previous three years. Electricity prices saw a 17% decrease on a month-on-month basis, but also remain a significant 22% higher compared to April 2017.
Commenting on the monthly report, Naturgy Energy Analyst, Catriona Walsh, said: “With the beginning of the gas market summer period comes a cooling off on prices and demand for April, which is having a knock on effect on electricity prices. However, gas prices have been notably bullish when compared with previous years, largely due to acutely low storage inventories on the Continent and a volatile British gas market.”
Ms. Walsh continued: “Prices are likely to remain bullish as a period of heavy Norwegian maintenance together with high storage injections across Europe is expected meaning any unplanned outage could potentially have a large impact on summer storage injections and prompt prices.”
Gas Market Overview
In euro terms, Irish wholesale gas prices are almost 21% lower on average this month compared with March. However, prices are 23% higher when compared with April 2017.
This month’s losses continue to be attributed to milder weather conditions and lower demand. The large year on year gains are largely a result of the lack of storage flexibility on the Continent and in particular the UK with the absence of Rough storage. Following a bullish March, prices failed to yield gains, opening approximately 87% lower in the opening week of April compared to March’s opening period.
The average Day-Ahead price for gas, the contract for gas delivery tomorrow, is 1.98 c/kWh (cents per kilowatt hour) for April. This compares with an average price of 1.61 c/kWh in April 2017.
Irish wholesale gas prices are 16% higher (in euro terms) compared with the average monthly price recorded for April over the previous three years.
Electricity and Wind Update
The average wholesale price of electricity in the Irish market in April was 5.56 c/kWh (based on prices up until 20 April). This represents an increase of 22% when compared to April last year, but is a decrease of just over 17% month-on-month.
The main driver behind this downward movement is a drop in gas prices, which have come down from the extreme highs experienced in March, but remain above 2017 levels.
Renewable resources made up less than 18% of the fuel mix in throughout April. The highest level of wind generation in the month was recorded on 16 April, where generation reached 3,557 MW, while average generation for the month was 1,355 MW (based on figures up until 27 April).
The SEM Committee announced on 17 April that the date for the introduction of the new power market, I-SEM, would be pushed back, with the revised date now 1 October 2018.