November Report

Summary of last months report:

Overview:
October saw the majority of contracts decline in cost, with the exception of a few near start dates which saw increases as we head into winter. This is caused by a mix of increased demand caused by colder weather battling very high levels of LNG shipments arriving.

Gas:
As can be seen below, the month started by continuing the trend of previous months with a continued decline. This trend is driven by increased LNG shipments arriving in the UK with a healthy forecast for more, European storage levels at maximum capacity and lower than forecast demand. It is expected that this decline in cost will temperately be halted, or even see small increases, as below seasonal temperatures are forecast. This should be offset, though should the scheduled arrival of LNG shipments arrive in November to reinforce the already oversupplied market.

The same downward trend is also seen in contracts starting further out (Q1,Q2,Q3 of 2020) and these will be less impacted by winter 2019 but do have their own factors to consider.

Electricity:
Electricity has followed the path created by gas, due to our generation mix still being reliant on gas fired generation. The below chart shows contract prices for December which have been heavily impacted by increased wind generation.

Oil:
Brent Crude was volatile in October. The Saudi Arabian refining that was attacked by drones has recovered faster than forecast which helped reduce costs, however news that OPEC are planning a reduction in output alongside mixed reports from the US-China trade talks has led to uncertainty in the market.

November Energy Price Outlook

Factors potentially reducing costs:

  • Increased volumes of LNG shipments
  • European storage at capacity

Factors potentially increasing costs:

  • OPEC reducing output
  • Colder weather than seasonal norm forcing market movement

Recommendations:
Despite the volatility in the market the contract costs for renewals upcoming in the next 12 months are still favourable. This is however heavily caveated by Brexit and the potential for the volatility this may bring. Our recommendation is still that any business with a renewal in the 12 months should contact us to review their options. There is no commitment to contract at this stage but fully understanding the available options will increase the businesses ability to have a success procurement.

November News Stories

Fracking halted after government pulls support
Due to amid fears about earthquakes in England, the government has stopped shale gas extraction, also known as fracking. 
Fracking was suspended at the end of August after activity at the Preston New Road site in Lancashire caused a magnitude 2.9 earthquake. Click here for more information.UK’s renewable generation soars by 39% year-on-year in third quarter of 2019

The UK’s renewable generation soared by 39% in the third quarter of 2019, up from the same period the year before.A new statistical release from the Department for Business, Energy & Industrial Strategy (BEIS) shows this surge in clean energy was driven by strong growth from wind and hydropower. Click here to read more.

Ginger Partners with EO Consulting

Ginger have recently worked with partner Eo Consulting to assist our clients, via a fully funded model, in reducing energy consumption and reliance on the grid via a variety of methods including solar, LED lighting, removal of on site servers etc. A short article has recently been published for academies looking to reduce their spend: https://compliance.handsam.education/compliance-matters-nov-2019-issue-20#!/energy-efficiency-in-school