The last two to three weeks have been very encouraging for energy consumers looking at forward contracts in 2023. Prices were initially sustained in December by the prolonged cold snap. However, once this ended and much milder, windier weather hit the UK and the wider continent, so prices have dropped accordingly. There is always a fall in demand between Christmas and the New Year, but this has been compounded by record temperatures and reduced gas consumption as heating is turned down (an unprecedented 25c in Bilbao on New Year’s Day showing just how far we are from the norm). The mild weather means that the gas storage built in response to Russia’s actions remains in place. Winter is de-risked and so future season prices are easing.

That is not to say that prices are anywhere near what was considered normal say 18 months ago. April ’23 is now showing annual wholesale prices at circa 20p/kWh for power and 8p for gas; an equivalent normal price up to 2021 would have been 6p for power and less than 2p for gas. So whilst the current falls are encouraging, prices remain massively inflated both commercially and domestically. Hopefully the prolonged mild forecasts will embed the currently bearishness to regain further value in 2023.  

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