Relatively robust renewable output lowers power prices

Tuesday 5th April 2022

Energy prices for the second half of March remained dominated by events in Ukraine. Whilst there has been downward pressure from various peace talks, the question of Russian gas flows is front and centre of most trading decisions. Having initially seen gas fall back from the post-invasion peaks as it became apparent that the EU would not sanction gas, the recent Russian stipulation that contracts should be paid in roubles (to shore up the currency) caused a renewed surge. There appears to be an uneasy calm at present where flows continue and Germany in particular refuses to change their contract currency.

In the wider energy context, robust renewable output helped de-risk the market, and Joe Biden releasing US strategic oil reserves brought crude closer to $100/barrel. Carbon and coal are off too, as fears grow of recession, driven of course by the significant surge in energy costs. The 1st April increase in the UK domestic energy cap has brought the crisis into greater focus, prompting more concrete discussions on new nuclear and on-shore wind farms.