Energy market prices could see a rise this summer due to unplanned outages at gas fields, warns a report by commercial energy and sustainability consultancy Advantage Utilities.
These outages are limiting the UK’s gas-fired power generation capacity, which may be further affected by yearly maintenance during the summer.
As a result, energy prices are expected to increase significantly, especially during the summer months, experts have said.
Although wholesale prices have dropped compared to last year, they remain higher than pre-2021 levels.
However, since early June, there has been a slight rebound in the market, with prices increasing due to low levels of liquefied natural gas (LNG) cargoes reaching UK ports and a greater reliance on gas caused by low wind levels.
Extended unplanned outages of gas fields have also contributed to the price hike.
International factors could further impact LNG prices, with an increase in gas demand from China potentially leading to a trade war in Europe over LNG supply.
While global LNG supply is expected to grow by 3.7% over the summer, this is a significant slowdown compared to the 6.4% growth observed in the previous summer.
China’s near-top-end imports of LNG over the past five years raise concerns about the availability of supply for both Europe and China.
Current European gas storage levels are relatively high at around 73% full, the second-highest level in the past five years.
This has helped bring down LNG prices to some extent.
However, increased gas demand in the UK, coupled with pressure and competition from China, could push prices higher.