Hello my name’s Alex, I’m from PES and here is today’s market summary.

Prices have been extremely bullish since October 2021. As we came out from the global pandemic we saw an increase in demand across the world creating an energy crisis, not just in the UK but also in Asia. This sped up demand competition from LNG which pushed prices up across the curve for both gas and electricity. Moving into early 2021 we saw the invasion of Ukraine from Russia which only added fuel to the fire as we saw prices rally on the back of that to all-time highs. Now as we scrabble around to try and find extra LNG and gas ahead of this winter we look to America to provide the shortfall of LNG. Unfortunately the largest export terminal for LNG from north America, the free-port terminal, caught fire creating extensive damage and has now put that out of action and for the foreseeable future. This has also led to an extreme, volatile marketplace in which we’re seeing prices trading at levels previously unheard of. In relation to this we’ve got the complete shutdown of the Nordstrom One pipeline between Russia and Europe – this is normal for this time of year as maintenance is taking place there, however there was a disruption within the market as the Siemens turbine used to move gas across the network was sent to Canada for maintenance. There were some legalities about the sanctions in place on Russia at the moment and how that affects Canada returning the turbine, where it’s currently undergoing maintenance, back to Russia in time for the flows of gas for winter to Europe.

It does appear as though there’s light at the end of that tunnel although it is expected across the market that there will be a bit of theatre when it comes to will Russia turn the gas back on or not and what that may look like. However there’s a settling in the market presumably on the back of contingency plans being put in place by Germany, such as potential gas rationing throughout winter to manage this period.

I’m pleased to report that after a long rally and significant price increases it is nice to see some downward pricing both on gas and electricity across the curve, which started late Thursday and has continued throughout all of Friday. At the moment this leaves a lot of
businesses unsure as to what the right decision is for their cost on energy going forward –
there is no simple solution to that, it is a very difficult time in order to make this sort of conversation, to make these sort of decisions. However there are options available: there’s the traditional fixed price energy contract, there’s the flexible energy contract in which you can take hedges at different times and thus avoid contracting to historically large and high energy prices or there’s the option to contract direct through generators.

We’re seeing a significant move into alternative types of contracting this year which is great news for the renewables market and great news for the end consumer, as in the long run this should certainly push prices down.

For more information about how you can best manage your energy in this current situation please feel free to get in contact.