What’s impacting the current energy prices in the power markets?

Wholesale gas and power markets have continued to trade in erratic fashion over the past few months, as market participants grappled with supply risks for this winter.

Image: EDF Energy

We saw the W22 UK power price, surge to fresh highs of £850/MWh on August 26th, before prices crashed off after news of market intervention from across Europe and some stronger supply fundamentals:

  • Fears over further Russian gas supply cuts came to fruition as Nord Stream 1 flows were significantly reduced and eventually halted completely. Combined Russian flows, through their 3 main pipelines to Western Europe have decreased from c.4TWh/d back in 2020, to just 0.4TWh/d over last month.
  • French nuclear issues, low hydro reserves and credit issues all continued to add risk premium through late summer, with French Q1 baseload pricing remaining over €1,000/MWh.
  • Fundamentals have started winter on the soft side amid mild and windy weather, whilst LNG supply remains rampant. As a result, EU storage continues to fill, reaching 92%, however key risks remain in Q1.

The EU energy market has seen unprecedented volatility and uncertainty over the past few months and although concerns have seemingly eased since August highs, with market intervention and mild windy weather, there is still a tough and long winter ahead.

There’s more than ever going on across the energy complex so I’m sure you are wondering how you can stay on top of the wholesale energy price as it changes, especially in uncertain times like these?

Join our free bi-monthly webinars on the UK Power Market with James Chaplin, Senior Manager of Portfolio Hedging at EDF. Energy is a complex business, but hopefully we can make it simpler by keeping you informed on the changing prices.

The next one is coming soon, on 26 October 2022 at 2pm. Don’t miss out! Sign up here.

In the meantime, watch James run through the factors that influence the wholesale price of power – what they are, how they work, and what to look for – in more detail.

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