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Insights: A calm February, but will it last?

07 March 2023

The trend of January continued in to February, and markets have remained relatively calm, so far in 2023.

On average, prices in the SEM Day Ahead were reasonably flat month-on-month. February’s outturn was €159/MWh, compared to €162 in January.

British gas (NBP) has seen significantly reduced volatility, as LNG supply continues to flow and higher than average temperatures and reasonably high winds relieve pressure on gas requirements. Irish power prices have followed suit.

Lower prices were assisted by lower volatility in the British gas (NBP) market and much higher levels of wind, when compared with early December.

Gas – Pricing & Supply

Volatility in European gas markets (including the UK NBP) has remained low. The main factors behind reduced volatility in the first 2 months of 2023 are:

  1. Continued flows of LNG to European ports.
  2. Comfort around aggregated storage levels in the continent, which have been reported to still hold over 60% capacity.


Gas – Consumption & Storage

  • Stocks across the EU were reported to be 58% full on 27 February, compared with the previous five-year average of 35% full for the date. Higher than average forecasted wind on the European mainland should help to support storage levels during a cold snap expected in March. See data below, obtained from ICIS.

Gas demand in Europe has picked up as we head into a cooler March. However, withdrawals for 2023 so far remain well below the average. See graph below, obtained from ICIS.

Demand reduction measures remain high on the agenda, and should form a key part of European market reform proposals, expected in March.


Where might power prices go?

As hope grows for prolonged lower power prices in 2023, we take a quick look at some of the variables that could push prices either way.

Could prices fall?

  • The trend is certainly downwards at the beginning of 2023 and some of this momentum is due to the markets comfort with newly evolved gas supply networks.
  • If proposed EU reform around areas such as joint purchasing and a reliable LNG benchmark are executed properly, this may bring more order to markets and even keep prices down.
  • High on the agenda in Europe is demand reduction. If member states can materially reduce gas and power consumption on recent years, this will surely have a positive impact on prices, from a consumers point of view.
  • If weather conditions remain favourable and demand can be responsibly managed than there is every chance that we could see an average power price much lower than that seen in 2022.

Could prices rise?

  • Now that European gas prices are at the mercy of international LNG trade, global supply and demand economics will have a heavier influence on European gas prices. The recent drop in prices may start to stoke demand for gas in Asia, particularly as China’s economy reopens. This may have the effect of pushing power prices upward.
  • International demand aside, the falling price may reignite some demand for gas in the European industrial sector, from users who had the ability to switch between fuel types during the erratic high price environment of 2022.
  • With lower gas prices, gas fired generators will be “in merit” as a power generation source, therefore increasing demand and prices
  • The large number of unknowns in international energy markets mean that very few commentators see a return to pre-Covid wholesale gas prices in the near future.


Renewables, in the form of wind, contributed 42% of the Generation Mix in February; This will have helped to keep power prices down, but represents relatively low wind generation for February, which had averaged 55% in 2021 and 2022. See graph below.

The data from the graph left shows that when wind generation was down, namely toward the end of the month, the wholesale cost of power ticked up; emphasising the importance of wind generation on the Irish power grid.

Generation Capacity

  • Outages picked up a bit in February, but have not reached a level of concern yet.

Forecasts – Power Forward Prices

  • The first 2 months of 2023 have brought a calmness not witnessed in markets since before the energy crisis.
  • A range of shifting geopolitical factors linger, that could yet push gas prices upwards again in 2023. These include the unpredictability of the war in Ukraine and the newly emerging structure of gas markets.
  • This has ensured that future prices remain historically elevated and a high level of risk premium will remain in energy markets in the short to medium term.

  • Forward prices are now approximately 3x the previously accepted norms.


Pinergy Risk Matrix

We have compiled a list of the key factors we feel have the highest potential to influence power prices over the coming 12 months and rated as follows:

Green   = Price reducing impact and highly probable.

Amber  = Risk of increased power prices and of lower concern.

Red      = Significant risk to 12 month forward price outlook, with medium to high probability.


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Nathan O’Sullivan

Nathan O’Sullivan

Analyst - Energy Markets
Nathan provides our clients and stakeholders with a unique insight into the Wholesale Energy Markets



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