Irish Wholesale Gas and Electricity Prices
Irish wholesale gas and electricity prices decreased by 39% and 27% respectively compared to the same period last year, according to the latest Naturgy Energy Review and Forecast. The report shows that wholesale gas prices fell by 16% on a month-by-month basis while electricity prices registered a decrease of 10%.
The review shows further stability in the gas market is expected in the coming month with healthy supply forecasts and mild weather conditions leading to reduced demand. In the electricity market, the report highlights the importance wind generation has on wholesale electricity prices, with the monthly decrease due to a high proportion (41%) of generation coming from renewable sources during March.
Commenting on the review, Naturgy Energy Analyst, Lauren Stewart, said: “The losses in wholesale gas prices are in stark contrast to March 2018 when the ‘Beast from the East’ hit Ireland, resulting in a significant increase in demand on gas at the time.”
“The impact of Brexit has loomed over the new SEM since it has been established, with questions over how it would continue to trade in the case of a no deal Brexit. However, the SEM Committee has advised market participants that SEM would continue to trade as normal in the case of a no deal Brexit, but may be less efficient”, added Ms Stewart.
Irish Wholesale Gas Electricity Prices
Gas Market Overview
March signified the first-time that prompt prices dropped below the 40 p/therm threshold since August 2017. Tempered demand as a result of mild weather conditions was met by abundant supply from LNG cargoes, which contributed to the softening of prices.
Risk premiums are being shed from seasonal contracts as we approach the day of delivery as outlook for storage appears healthy. March saw eight LNG vessels being offloaded on UK terminals with 16% of Europe’s demand being met by LNG, considerably more than the previous two gas winters. Many shippers took the opportunity to inject into storage, as comfortable supply margins incentivised preparing for the gas winter.
Electricity and Wind Energy Update
Wider fundamentals in the electricity market were similar to last month, with renewables meeting 41% of supply in Ireland, lower gas prices and dampened demand due to mild weather contributing to prices averaging at 4.92 c/kWh.
Wind generation significantly impacts wholesale electricity prices and 29% of Ireland’s electricity generation was met by wind capacity in 2018.