Irish wholesale gas prices are 14% lower on average this month when compared to December 2017. The Naturgy Monthly Energy Report for January 2018 shows Irish Wholesale electricity and gas prices decreased by 10% and 14% respectively over the last month. Mild weather conditions at the start of 2018 curtailed demand, while strong continental gas imports encouraged further price decreases.
Commenting on the monthly report, Naturgy Energy Analyst, Catriona Walsh, said that: “Along with milder weather, healthy continental storage seen throughout the opening month of 2018 fed the downward momentum of gas and electricity prices. The next few weeks should see the downward trend end as temperatures are expected to dip below seasonal averages during February.”
Ms Walsh said that the recent changes in the electricity market may also impact the sector. “The announcement that Northern Ireland’s largest power station would close down is very disappointing news for the market; however, the System Operator for Northern Ireland (SONI) has provided clear reassurances that there will be ongoing sufficient and secure power generation.”
“Other factors, including Viridian Energy’s recent notification of plans to close both their power plants, which have capacity to supply 20% of Ireland’s electricity needs, could lead to further constraints on the power system in the Dublin region. However, it is clear that there is adequate generation capacity on the island of Ireland to meet the security of supply standard in Dublin”, Ms Walsh added.
Gas Market Overview
In euro terms, Irish wholesale gas prices are 14% lower on average this month when compared to December 2017. Following a bullish December, prices failed to hold previous gains, opening 6% lower in the first week of January, before continuing to shed value throughout the month. Significantly milder conditions at the start of the New Year curtailed demand, while strong continental imports encouraged further price decreases. The downward trend is likely to end soon as temperatures are set to dip below seasonal averages as we move into February.
The average Day-Ahead price for gas, the contract for gas delivery tomorrow, is 1.96 c/kWh (cents per kilowatt hour) for January. This compares with an average price of 2.12 c/kWh in January 2017.
Overall, prices are more favourable than twelve months ago, with a saving of 8% in euro terms.
Electricity and Wind Energy Update
The average wholesale price of electricity in the Irish market in January was 5.13 c/kWh, a decrease of over 11% compared with January 2017 and down nearly 10% on last month. The main reason for a drop in SMP is increased wind generation, which has contributed to 58% of overall electricity generation on the island of Ireland so far this year, with a record of 3,331 MW hit on 03 January. Total wind generation capacity on the island has increased to 4,429 MW.
The announcement that Northern Ireland’s largest power station closing down, potentially removing 36% of Northern Ireland’s dispatch capacity, comes after the power station lost out in the first capacity auction of I-SEM. This could be a catalyst for volatility for the coming months as it raises concerns about the security of supply in the area.