If only we had a crystal ball…
In the absence of a device to reveal the future, we’ve instead used our market knowledge to set out the most likely scenarios to influence the power, gas, oil and carbon markets in our newly-launched Winter 2022 Outlook report.
Our aim is to help energy consumers identify key drivers to be aware of over the coming months.
All eyes on the weather
When it comes to energy demand – and especially gas – a key determinant is going to be the weather. A cold spell will increase demand right across Europe, which is likely to then push already high prices even higher.
That said, residential use is likely to be lower this year, due to many consumers planning to adopt energy conservation or even avoidance measures in the face of the cost of living crisis.
And some large business consumers – such as fertiliser manufacturers – are already avoiding production during periods of high prices.
So if this behaviour continues, it may help to moderate prices.
Jitters over French nuclear output
When it comes to power, the two key factors influencing prices are French nuclear output (as we import power via our Anglo/French interconnectors) and the availability of gas for power generation.
In France, maintenance has seen 32 reactors go offline during this year, which is limiting spare capacity for export. It’s hoped many will return to operation before the colder weather begins.
In the UK, the use of more coal-fired generation is likely to go some way to helping to alleviate supply pressures, albeit in more polluting way than is ideal.
But we’ve also lost some of our nuclear output this winter, due to old plant closing, so that will add further demand pressures.
Multiple factors in focus
In relation to gas and power, our Winter 2022 Outlook also looks at:
- The El Niño/La Niña effect on winter weather, including wind output (all important for wind generation volumes)
- The status of Liquid Natural Gas (LNG) supply, both in the UK and across Europe
- Russian gas flows – including via Ukraine and the situation with Nord Stream 1 and 2 since the recent explosions
- Determining wind generation output and its influence on the wider market
The Winter 2022 Outlook report also assesses the carbon market, and the factors influencing a drop in the recent run of high prices.
And we look at oil, and the many geo-political factors influencing prices.
If you’re an existing flexible-purchasing customer, you will receive your copy of Winter 2022 Outlook by email.
For any other interested party, you can request a copy by emailing your details to flex.optimisation@npower.com
As always, if you have questions or need support around setting your energy purchasing strategy, do please get in touch with your Client Lead or Account Manager. Or email us via info@npowerbusinesssolutions.com.
