Wholesale electricity and gas prices in Northern Ireland have finished the year at elevated levels, reflecting the undercurrent of uncertainty which prevailed throughout much of 2017, according to the Annual Vayu Energy Report.
Gas prices in December 2017 were more than 15 per cent higher than average day ahead prices for the same month in 2016, with prices closing 38 per cent higher than the average for the rest of the year.
Average day ahead gas prices are up 28 per cent year on year in 2017.
The considerable jump can be attributed to market corrections, according to Vayu spokesperson Keith Donnelly, following eight year lows in 2016, with 2017 prices more in line with most other years.
2017 saw the expected and subsequently realised impact of storage on prices, with the closure of the Rough storage facility leaving the UK without any long range storage options. The Corrib gas field was taken off-line during processing for safety reasons and supply issues throughout the year also impacted the sector.
Commenting on the report, Keith Donnelly, senior energy analyst at Vayu Energy, said: “If December 2017 is a precursor for Q1-2018, we may be in for a volatile period ahead. Wholesale prompt gas prices experienced a major spike the week beginning 11th December after an unplanned shutdown of the Forties oil and gas pipeline – Britain’s largest oil pipeline – in the North Sea. This exacerbated ongoing supply outages at a time of higher demand due to colder than normal weather”
He continued: “Overall, the outlook for 2018 is largely positive for the global economy and this will have a positive impact on the gas market. Improving financial conditions and supportive fiscal policies look set to continue into the New Year.”
Electricity and Wind Energy Update
Looking to 2018, the main price drivers of electricity will be energy commodities, demand on the system and the amount of renewables present in the fuel mix, as well as the introduction of the Integrated Single Electricity Market (I-SEM) in May.
Speaking about the electricity market, Mr Donnelly said: “2018 will be a year of change for the Northern Ireland electricity market. Early 2018 gas prices are forecast to remain around current levels, with the potential for increased volatility. Electricity prices should follow suit and remain at current levels for the near term.”