Summary of last months report:
Across the board, gas and electricity wholesale markets fell during October. The below chart summarises movements in the gas markets for contracts starting in summer 2019. The same picture is also true for that of electricity.
- The reduction in cost was caused by multiple factors including increased gas output in the UK and Norwegian fields, above seasonal temperatures and higher than expected wind generation. In addition the UK received unexpected LNG shipments which have allowed for the UK gas storage to reach maximum levels.
Concerns Frances ability to support the UK power demand have been alleviated as French nuclear outages have ended.
- Oil also saw falls during October with prices falling to $76/barrel. Ahead of sanctions impacting Iran as well as Venezuela, Opec and Russia increased production by c290,00 bpd.
- Whilst the market has seen drops in the last month the costs are still considerably higher than recent times. The current market rate for gas and power is the highest since 2008.
November Energy Price Outlook
Areas of concern:
With the current infrastructure issues coupled with supply and demand risks there is a real concern that costs will continue to increase during Winter.The big unknown factor is the impact weather will have on the supply industry as we have experienced highs and lows over the last months.
Despite recent drops in the market the wholesale costs remain very high. This could lead to further drops but with many risk factors remaining live the market is subject to increased volatility should any of these factors come into play. A major factor will be the weather during the winter months and as has been seen in the last few years is very difficult to predict.
November News Stories
First shale gas produced in Lancashire:
Cuadrilla has announced that the controversial fracking site in Lancashire has produced shale gas for the first time. Click here to read more on this story.
Renewable energy surpasses Fossil fuel:
A milestone achievement for the UK, as their capacity of renewable energy has overtaken that of fossil fuel for the first time ever. Click here to read more on this story.
CRC AND CCL:
With the Carbon Reduction Commitment (CRC) scheme being abolished in 2019 there are severe increases in Climate Change Levy (CCL) being introduced in April 2019. Whilst CRC only applied to large users CCL applies to the vast majority of users regardless of consumption levels. The increases can be seen below.
Should a business use 100,000 kWhs of electricity they would currently pay £5830 in CCL and from April this will increase to £8470. If your business is currently involved in the processing or manufacturing of ceramics, metal or glass you may me eligible to pay zero CCL. Call us now to discuss.
ESOS PHASE 2:
If your business (at group level) employs more than 250 staff or has an annual turnover greater than £38.9m with a balance sheet in excess of £33.5m you must partake in The Energy Savings Opportunity Scheme (ESOS).
ESOS requires the organisation to measure its total energy consumption, including buildings and vehicular, conduct energy audits to identify energy saving opportunities and report compliance to the Environment Agency.
Non-compliances can incur a variety of penalties from the EA. These can be upto a £50,000 fixed penalty plus £500 per day.
Compliance with the second phase of the scheme must be completed and reported to the EA by 5th December 2019.
Ginger Energy does not complete or manage the ESOS obligations for clients but we do provide large amounts of the required data and can recommend trusted partners to manage the ESOS process.