Business

Wholesale gas prices soar 34 per cent in Ireland over last year says Vayu report

Wholesale gas prices in Ireland were up 34 per cent in April compared to the same month in 2016
Gary McDonald Business Editor

BILLS for gas customers in Northern Ireland are set to soar next winter, an energy provider is warning.

Vayu's latest monthly energy report points to the fact that wholesale gas prices, despite dipping down in recent weeks, have risen by a whopping 34 per cent since April 2016.

And the closure next year of Britain's largest natural gas storage site at Rough, on the east coast of England, is set to bite in Ireland.

It will increase dependency on imports over the next few years, boosting wholesale market volatility and consumer gas prices.

Rough, commissioned more than 30 years ago and the country's only seasonal gas storage site, can usually meet around 10 per cent of the UK's peak daily gas demand but is currently capable only of handling less than half of this.

"This seems sure to impact gas wholesale prices in Northern Ireland for next winter," Vayu's senior energy analyst Keith Donnelly said.

“Research has shown that, when operational, the Rough storage facility reduces the levels of volatility in the market.

"Volatility can have a significant impact on Northern Irish businesses and we have seen many of our customers taking advantage of current winter prices to insure themselves against this potential threat."

Despite the 34 per cent year on year rise in wholesale gas prices, over the month there was a 4 per cent drop, while wholesale electricity prices came down 2 per cent according to Vayu, which supplies 20 per cent of Ireland's largest natural gas business users and launched its electricity supply business in 2007.

Mr Donnelly added: “In general, the increased prices are a return from what was an unsustainable low that the market could not continue to operate at.

"The weaker pound over the last 12 months has exacerbated the dramatic increase, particularly in relation to electricity.

"And if sterling continues its recent form and strengthens, then Northern Irish businesses would benefit in the form of cheaper electricity.”

The average day-ahead price for gas in April was 39.51p per therm compared to 29.47p/th in April 2016.

Prices are currently being supported by below seasonal normal temperatures, a lack of LNG on the immediate horizon, and some cuts to production due to maintenance.

Despite a lack of demand for storage injections, unseasonably cold weather has offset any potential for prices to soften.

The average wholesale price of electricity in the market in April is 3.83p/kWh, an increase of 33 per cent compared with April 2016 and down 2 per cent compared with March.

Total wind generation capacity on the island of Ireland now stands at 3,736 megawatts.

Wind energy accounted for approximately 18 per cent of overall electricity generation in Ireland in April, reaching a peak of 2,738mw on the third of the month, which had the potential to meet over 57 per cent of the island's total electricity demand.

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