March 2017: Irish Wholesale Energy Prices Drop by Almost 20% as Weak Sterling Continues to Protect Irish Businesses

  • The average wholesale price of electricity shows an increase of 23% compared with March 2016
  • Total wind generation capacity in Ireland now stands at 3,615 MW

24th March, 2017: Wholesale energy prices dropped by nearly 20% in the last month as increased gas supplies in the UK combined with an ongoing mild winter continued to push prices downwards. However, the Naturgy Energy Report shows that despite this substantial drop wholesale gas are 29% higher and electricity prices are 23% higher than 12 months ago. Weak sterling due to Brexit has protected Irish businesses from a more severe increase as sterling gas prices increased by 43% over the same period.

Commenting on the Naturgy Energy Report Naturgy Senior Energy Analyst, Keith Donnelly said: “We are continuing to see wholesale energy prices remain considerably higher than last year as the market recovers from a year of very low prices. The recently expanded Panama Canal now means that an increased number of Liquefied Natural Gas (LNG) tankers are coming to the UK, which impacts the price of wholesale gas. In March the very first Peruvian LNG ship arrived in the UK. Overall we expect that gas and electricity prices may drop somewhat in the coming months as the summer approaches and that the largest gas storage facility in the UK won’t start injecting gas until the third quarter. However, there are significant concerns about this facility (Rough Storage) and if it will be available next winter. The failure of Rough Storage to come back online would have a significant impact on energy prices this winter.”

Irish Wholesale Gas:

Irish wholesale gas prices are 29% higher on average this month compared with March 2016 (euro). There is some market correction, following on from a year of considerably low pricing accounting for the majority of the price increase, while limited availability of storage gas over the winter months added an additional premium to prices. Brexit, and the subsequent devaluing of sterling, has helped to offset some of the gains made on the gas markets, protecting Irish businesses. In sterling terms prices rose by 43%, compared with a much lower 29% when converted to euro.

The average day-ahead price for gas, the contract for gas delivery tomorrow, is 1.66 c/kWh (cents per kilowatt hour) for March so far. This compares with an average price of 1.29 c/kWh in March 2016. Irish wholesale gas prices are 15% lower (in euro terms) compared with the average monthly price recorded for March over the previous three years (2014-2016).

Electricity and Wind Energy Update:

The average wholesale price of electricity in the Irish market so far in March is 4.56 c/kWh, an increase of 23% compared with March 2016 and down 18% compared with last month. The year on year gains can be largely attributed to the substantial increase of gas prices over the same period. Total wind generation capacity in Ireland now stands at 3,615 MW. Wind energy has accounted for approximately 30% of overall electricity generation on the island of Ireland so far this month, reaching a peak of 2,992 MW on 17 March. This peak generation had the potential to meet over 60% of total electricity demand on the island of Ireland at that time.