Wednesday 24 April 2019

Wholesale energy prices surge to 38pc above average

Gas prices on the rise this year
Gas prices on the rise this year
Charlie Weston

Charlie Weston

Wholesale electricity and gas prices ended the year up strongly.

New figures from energy supplier Vayu shows prices in December were over 15pc higher than day-ahead prices in 2016.

And prices closed 38pc higher than the average for the year.

According to the annual Vayu Energy Report these are considerable rises, but are due largely to a market correction, coming off the back of eight-year lows in 2016.

This year saw the impact from the closure of Rough, the UK's largest natural gas storage sight, leaving the UK without any long-range storage options.

The Corrib gas field was also taken off line during processing for safety reasons, and climate volatility throughout the year also affected the sector.

Vayu senior energy analyst Keith Donnelly said the outlook for 2018 looks largely positive for the global economy as loose financial conditions and supportive fiscal policies look likely to continue into the new year.

"There are some factors that may have a negative impact, like continued political jitters surrounding the UK and Germany and the Chinese government will continue to manage their economic slowdown through 2018 also."

But he said that if the euro continues to perform well against the pound this will be good news for Irish energy.

"Generally speaking, for energy users in Ireland buying gas in euro a potential weaker pound augurs well, as the majority of natural gas is still imported from the UK," Mr Donnelly said.

He said next year will be one of change for the Irish electricity market with global economics playing an integral role and the integrated single electricity market set to go live.

For the most part, the world's largest economies are performing well which is having a positive impact across the rest of the globe, he added.

"Loose financial conditions, low inflation, strong global trade and encouraging fiscal policies in countries that have experienced many years of austerity is lending to the revival of the global economy."

But he said the energy market could be in for a volatile period ahead.

Irish Independent

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