Posted on: 22/09/2021
Energy news hits the mainstream headlines as global gas demand surges, pushing gas and power prices up to record-highs in recent weeks. In this blog, SmartestEnergy summarise the current market situation and the driving forces behind the extraordinary market volatility we’re experiencing.
Last week, Sales Trader, Jean-Philippe Marty, published a blog on a record-breaking day for energy prices as we saw the initial effects of the rise in global gas demand ahead of the winter season.
Over the last week, the situation has evolved with concerns over European gas supply, unseasonably low levels of wind generation, nuclear generation plants offline and further unexpected outages.
A fire at National Grid's IFA1 interconnector site in Kent on Wednesday last week also put additional pressure on the UK market. The incident at the National Grid ESO site, which connects GB to France was at half capacity, meaning 1GW of capacity dropped off the system. Damage to the interconnector is expected to limit cross-Channel capacity until March 2022. Meanwhile, National Grid ESO has confirmed IFA2, the second interconnector site between GB and France is operating at full capacity and as normal.
The recent market events have threatened the energy retail market, leaving smaller/domestic suppliers extremely vulnerable to rapidly increasing prices. Four energy suppliers (People’s Energy, Utility Point, PfP Energy and MoneyPlus Energy) have already ceased trading this month and energy company, Bulb are in talks to secure funding.
On Monday 20 September, Ofgem released a joint statement with the Business and Energy Secretary Kwasi Kwarteng. They said:
“We want to be clear that this is not an issue of supply – the United Kingdom benefits from having a diverse range of gas supply sources with capacity that can more than meet demand.”
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