The delayed arrival of winter temperatures led to a 9 percent drop on wholesale gas prices in Northern Ireland last month. The Naturgy Energy Review and Forecast for January 2019 shows prices remained significantly higher compared to January 2018, increasing 15 percent year-on-year.
The review also shows that electricity prices have increased by 4 percent month-on-month, but are a substantial 54 percent higher compared to January 2018.
On average, renewables account for 30 percent of the power generation mix, with wind generation down a significant 23 percent from the previous month.
Commenting on the review, Naturgy Energy Analyst, Lauren Stewart, said: “Sentiment in the wholesale gas market continued its bearish trajectory in the month of January after receiving record LNG supplies into Britain from the previous month. With strong deliveries of LNG into Europe expected to continue into February and March and the system characterised as being in extreme oversupply, any volatility in prices would be expected to be due to weather driven demand.
“The increase in electricity prices can be attributed to the unplanned outages at baseload generators like Moneypoint and Great Island which are vital to security of supply as Moneypoint alone can meet 16 percent of Ireland’s electricity requirements. We also witnessed a record price spike in the imbalance market during the month,” added Ms. Stewart.
Gas Market Overview
Sentiment in the wholesale gas market continued its bearish trajectory in the month of January, having shed value of 9 percent from the previous month. The outlook for January looked bearish from the offset after receiving record LNG supply into Britain from the previous month.
January experienced 5 LNG deliveries into British terminals, increased flows from the Dutch and Belgian interconnectors and domestic storage filled to 85 percent capacity. These bearish market fundamentals caused gas prices to shed value by 9 percent within a seven-day trading period towards the end of the month.
While market fundamentals, like temperature and security of supply, weigh on near curve contracts, the wider energy complex has a greater impact on contracts further out the curve. Bearish indicators from oil and carbon markets fed into curve as gas contracts for the coming two winters shed value by roughly 1p/therm during January.
Electricity and Wind Energy Update
Wholesale electricity prices have risen by 4 percent to an average of 7.02 p/kWh for January. Baseload generators like Moneypoint and Great Island have also been offline due to unplanned outages. A new record price of €3,774/MWh was registered in the imbalance market on the 24th January, due to a large unplanned outage in Northern Ireland when the Moyle interconnector was in export mode and low wind generation. These generators are important for security of supply.
Wholesale electricity prices varied significantly week on week with the prevalence of wind influencing its direction. On average, renewables accounted for 30 percent of the power generation mix, with wind generation down a significant 23 percent from the previous month.
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