A Market Report

Rise in Energy Prices

Energy prices have risen dramatically over the past three weeks and today we would like to inform you of some of the factors that have brought about this rise.

The volatility in the market began with the OPEC’s decision to cut oil production so as to stem the 18 month decline in price of oil by-the-barrel. Furthermore, Switzerland, France and Germany have all said that there will be a slowing down of the production of nuclear energy by the first quarter of 2017. There is now worry that the demand for energy will supersede supply. This worry is being further exacerbated by the forecast of a very cold UK winter, the rise in coal prices and an unsteady UK Pound.

The price of power in the UK for November and December has now exceeded £61/MWh. It will then exceed £63.50/MWh in the 1st Quarter of 2017. These figures are the highest month-ahead and predicted quarter levels since Winter 2009.

Thankfully, the forecast for 2018 and beyond is looking a lot more competitive compared to the 6-12 months that we are heading towards. What we are seeing is a positive rise in longer term contracts being agreed by some of our biggest clients. Though the counter argument for this is that this rise will be matched by an increase in Third Party costs which are set to grow from 51% to 64% by 2019/2020.

Though less volatile, we have seen a rise in the wholesale price of gas across the board. The rise in price of Brent Oil and Coal coupled with a weak Pound have presided over increases in price that we have not seen in a number of years. Despite this fluctuation, mid to long term storage levels remain low.

Instability breeds indecision. An energy consultant such as Energycentric can help assuage all of your concerns. We devise strategy and are able to keep you posted every single step of the way. For those of you that have a renewal due between now and the end of 2016, it is vital that you are in contact with your Account Manager so that a strategy can be created as soon as possible

For those clients that have contracts due in the first quarter 2017, your Account Manager (if he/she hasn’t been already) will be in contact very soon to discuss strategy.

For all others, we shall be writing and/or contacting you soon to update you on developments, timetables and the near future.

Please do not hesitate to contact your Account Manager if you have any comments or queries you would like to discuss with him/her.