Wholesale gas prices rebound - but still down a third down on last year
WHOLESALE gas prices rebounded last month - but remain more than a third down on May last year.
Prices were 37 per cent lower over the year according to the latest Wholesale Energy Market Report from Vayu Energy.
The report also found wholesale electricity prices to have fallen 23 per cent over the year.
Meanwhile, 17 per cent of total electricity demand in the north has been met by wind energy so far this year, Vayu said.
Vayu Energy said the average day-ahead price for gas – the contract for gas delivery for tomorrow – is 30.06p/th (pence per therm) so far in May, close to the 10-year lows experienced earlier this year.
This compares with average prices of 44.07p/th in May 2015 and of 29.47p/th last month, it said.
It said the low wholesale prices was having a significant impact on the energy costs of many businesses in Northern Ireland purchasing gas on the wholesale market, particularly for users in the industrial and commercial segment.
Considering the outlook for the summer, Vayu senior energy analyst Joanne Daley however said: “While Norwegian gas production remains very strong by historic standards for this time of year, the Norwegian maintenance season is due to commence.
"Planned outages at a number of large gas fields could greatly reduce the flexibility of the system and contribute to price volatility. However this should be offset by continued robust supply of LNG (liquefied natural gas) from the Middle East which will help the system meet demand.
“The Norwegian maintenance also coincides with the UK’s largest storage facility going offline until the end of June. This will result in a significant reduction in storage injections during the period, thereby reducing demand within the system when supply sources could be tight.
"Overall, however, healthy supplies and lower demand due to warmer weather means we could see prices drop during the summer months.”
The report said the average wholesale price of electricity so far during May was 28.65 £/MWh – a decrease of 23 per cent compared with May 2015 (37.03 £/MWh) and a decrease of just under 1 per cent compared with last month.
The year-on-year drop in prices is attributed mainly to lower prices for gas, which is the main energy source used to generate electricity in the north. A strong contribution of renewable sources such as wind has also been a significant factor.
Ms Daly said increased wind energy was playing an "ever more important role" in meeting Northern Ireland's electricity demand, helping to drive down prices and reduce a dependence on more expensive sources of energy.