Gas worries push power Annuals higher still

Monday 4th July 2022

Power and gas markets movements continue to be dictated by the war in Ukraine and especially the question of Russian gas flows. Flows to Germany and Italy – the largest consumers of Russian gas in Western Europe – have been scaled back significantly, so concerns about energy security for the coming winter have increased. This has already prompted discussions about bringing coal-fired generation back on line on the continent and in the UK, in spite of the emissions. As such coal prices are rising, as is the associated cost of carbon. The key October 22 Annual has surpassed the post-invasion spikes for both gas and power.

UK prices have risen on the back of the much more significant increases for continental Europe. Not only is Russian gas a large consideration, there are also the ongoing safety issues with the French nuclear fleet, and increasing concern over water levels at hydro-electric lakes – with a heatwave predicted for the end of July, there may be price spikes on increased cooling demand.