Irish wholesale gas prices are 55% higher on average this month when compared to July 2017. The Naturgy Energy Review and Forecast for July 2018 shows Irish Wholesale gas prices increased by 5% on average compared with last week following a period of strong demand.
The review also shows electricity prices have decreased by 1% on a month-on-month basis and are a substantial 50% higher compared to July 2017. Renewable sources made up less than 14% of the average fuel mix for July, with the hot and settled conditions resulting in low wind generation and depleting hydro stocks.
Commenting on the review, Naturgy Energy Analyst, Catriona Walsh, said that: “Traditionally, July would be a period of calm in the gas market however 2018 has been an erratic year for gas prices, and July 2018 was no different as extreme weather conditions have pushed demand above seasonal averages.”
“Looking to the near future, the on-going Brexit negotiations coupled with an increasingly bullish US on trade issues will continue to influence the wider fuel market”, added Ms Walsh.
Gas Market Overview
Irish wholesale gas prices are approximately 5% up on average this month when compared with June 2018. However, prices are 59% higher when compared with July 2017. The large spread between 2018 and 2017 highlights the current volatility of the British gas market.
This month’s gains on the prompt are an outcome of strong demand, with extremely high temperatures pushing seasonal demand well above average through-out the month. Further along the curve contracts remain hawkish compared to previous years. Looking ahead, Brexit negotiations coupled with US trade wars will continue to influence the wider fuel market, and in turn, NBP curve contracts.
The average Day-Ahead price for gas, the contract for gas delivery tomorrow, is 1.97 p/kWh (cents per kilowatt hour) for July. This compares with an average price of 1.24 p/kWh in July 2017.
Electricity and Wind Energy Update
Wholesale power prices have moved slightly lower, by less than 1%, month-on-month, while remaining close to 50% higher than July 2017. Renewable sources of generation made up less than 14% of the average fuel mix for July, with the hot and settled conditions that persisted over the UK and Ireland resulting in low wind generation and depleting hydro stocks.
Average wind generation during the month of July was 545 MW, down from an average of 570 MW the previous month, a drop off of 4%. The maximum generation experienced on the system was 2665 MW, with wind speeds in the UK dropping from an average of 12.4km/h in June to 10.8km/h in July.
Gas fired generation made up more than 73% of the average fuel mix, adding support as gas prices held strong during the month, following strength in the wider fuels complex.