Summary of last months report:

Overview:
September saw a month of contrasts. The month started with continued declines across the market, but was sent into a surge mid-month with an announcement from EDF France that there may be the need to reduce output on safety grounds and a ruling by the European Court impacting Gazproms ability to utilise the OPAL pipeline.

Gas:
Continuing the trend of previous months the market started September with a continued decline. However, this was more than reversed when two factors combined to create a significant spike. The first factor was EDF France outlining concerns over engineering standards, there was concern that an unknown volume of nuclear sites would need to be withdrawn to fix the issues. With nuclear accounting for 80% of the grid in France, this would have had a significant impact as gas powered stations would be required to pick up the shortfall. The second factor was a European Court ruling that stated a 50% reduction of output was required on the OPAL pipeline between Russia and Germany. The compounded impact of this caused the below spike.
 
These spikes fall off towards the end of the month as a mix of stronger than forecast LNG shipments arrive in the UK. Reduction in demand and assurances by EDF France that there would not the requirement to reduce output occurred.

Electricity:
Electricity has followed the path created by gas, due to our generation mix still being reliant on gas fired generation. In addition to the above factors, there was also the ramification of the drone attack on an oil refinery in Saudi Arabia on 14th September to factor into the market. Again, this fell off towards the end of the month as the recovery time was less than forecast.

Oil:
Brent Crude c4% in September on the back of the drone attack in Saudi Arabia. The strikes knocked out 50% of Saudi Arabia’s refining ability and 5% of the global output. However, prices soon reversed as the oil production levels recovered quicker than forecast.

October Energy Price Outlook

Ginger price risk header October

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 successful procurement.

October News

Is human activity responsible for changing climate?

A study of 30,000 people in 28 countries and regions has concluded that the majority of people accepted that climate change is happening and that human activity is, in the least, partially responsible. In Great Britain alone, over 51% of people believe that the climate is changing and human activity is responsible. Click here for more information.

New low carbon capacity needed for the UK to hit their net zero by 2050:
New research carried out by Aurora Energy shows that wind and solar capacity will need to increase by more than 100GW, soaring from 33GW in 2019 to more than 140GW in 2050. These changes need to happen in order for the UK to reach their target of net zero emissions by 2050. Click here to read more. 

New Environmental Bill

Government is set to introduce a new Environmental Bill to parliament. The bill aims to ensure England maintains, but also improves, environmental protections as we plan to leave the EU. Measures to improve air and water quality are to be introduced, as well as solutions to tackle plastic pollution and restore natural habitats. Click here to read more.