Irish wholesale gas prices are 47% higher on average this month when compared to October 2017. However, the Naturgy Energy Review and Forecast for October 2018 shows Irish Wholesale gas decreased by 9% on average compared with the previous month; with storage injections and temperature having a significant influence over the direction of prices.
October saw the introduction of the Integrated Single Electricity Market (I-SEM), which is a new all-island market arrangement designed to enable Ireland’s integration with European electricity markets. The review also shows electricity prices have increased by 3% on a month-on-month basis and are a substantial 59% higher compared to October 2017. Renewable sources made up 34% of the average fuel mix for the month.
Commenting on the review, Naturgy Energy Analyst, Lauren Stewart, said: “During the summer, gas prices have been extremely volatile due to uncertainty in the pricing of other energy commodities and the depletion of storage levels from the harsh 2017/2018 winter. However, the wider energy complex has recently had a softening effect over winter contract prices. A weakening in carbon and coal markets resulted in Irish wholesale gas prices for Winter-19 to shed value by roughly 8% by the end of October.”
“As expected with the electricity market, the launch of I-SEM has led to a bedding in period and the intermittency of wind generation causing a lot of volatility in the market, particularly in the Balancing Market”, added Ms. Stewart.
Wholesale Gas Prices decreased by 9 per cent in October
Gas Market Overview
Irish wholesale gas prices remained firm throughout October, with storage injections and temperature having a significant influence over the direction of prices. Above seasonal norm temperatures and greater confidence around security of supply weakened prices, which saw a 16% loss in the second week of October. However, prices gained value in the latter half of the month as low wind generation bolstered demand from gas fired power generators. Temperatures are now forecasted to drop and a spike in weather driven demand could trigger volatility on the prompt given that prices were softer in October due to mild temperatures and healthy fundamentals building confidence in the market.
Electricity and Wind Energy Update
October saw the introduction of the Integrated Single Electricity Market (I-SEM), which is a new all-island market arrangement designed to enable our integration with European electricity markets. As with the introduction of any new market, there is a bedding in period that can see some interesting early days with day ahead prices averaging at 7.36 c/kWh for the month. Firm gas prices coupled with a number of large power plants being offline have supported this increase. Average wind generation during the month of October was 1,360 MW; up from 1,211 MW in the previous month. As always, the amount of renewable electricity on the system will have an effect on prices and in October 34% of the average fuel mix can be attributed to renewable sources. However, while the market gets used to the new structure, such as the introduction of a day ahead market, intermittent wind generation has caused a lot of volatility