Average power decreased in January down 23% on December, coming in at €211/mWh, 150% up on the same period in 2021.
The energy crisis is still raging, unabated.
1. Gas prices stabilised in January helped by US LNG imports to Europe
- Relatively stable gas prices in January helped the lower outturn for power in January.
- Geopolitical risk has supported price at/or over 200p/th.
- Market has priced in lack of direction of Gazprom deliveries. Gas moved Eastwards throughout January at Malnow (German /Polish border).
- The flotilla of Liquid Natural Gas (LNG) deliveries to Europe that commenced after the price spike in late December have continued.
- Record LNG imported to Europe in Jan ‘22. 3x on Jan 21 levels. 18% increased on previous record.
- Over 50% of Jan ‘22 deliveries sourced from US.
2. Renewables continued to improve boosted by more Wind
- Wind generation contributed 35% of the generation mix, down 20% on December.
- Renewable generation has improved in recent months, but 2021 will be remembered as a disappointing renewable year.
3. Irish Outages have improved since Summer of 2021
- Outages are well improved from the mid 2021 highs. Outages averaged 985MW during the month. The main outages were early in the month when demand was lower
- Forward price of power remains elevated due to bullish gas prices.
- Gas price supported by geopolitical uncertainty and failure by Gazprom to increase flows Westwards.
- European storage situation continues to deplete. 36% full as at end January. 20 points below 2018-21 average
- Storage reached 10% full following Beast from East
- With high summer ‘22 gas prices high, little incentive for shippers to buy ahead for storage.
- Poor visibility on Gazprom’s delivery intentions westwards.
Key drivers to watch
- Geopolitical situation in Ukraine – Negative
- Weather – Mild winter – February forecasts indicating above normal temperatures – Positive (so far)
- Pent up demand for Gas Summer refilling season – will support prices – Negative
- LNG deliveries will remain strong – US key source – Positive
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