Posted on: 14/11/2018
We are observing an upward market trend for green gas as demand increases and prices continue to rise. Amid this positive backdrop, Vishnu Aggarwal, Head of Renewables Trading, introduces SmartestEnergy’s green gas offerings and provides some insight into the gas prices over the last year.
Green gas (biomethane) has set itself apart from existing fossil-fuel derived natural gas provisions. As a renewable alternative, biomethane offers a solution for our sustainable energy transition. SmartestEnergy sees green gas and its related Renewable Gas Guarantees of Origin Certificates (RGGOs) as a way to support the UK in its efforts to decarbonise the grid.
Introducing SmartestEnergy’s green gas capabilities
We are proud to offer green gas capabilities, which not only benefit existing generation and supply customers, but also those who want to leverage our in-house trading team’s capabilities to secure a great deal in the market.
We can offer both fixed and flexible pricing for green gas, inclusive of certificate prices, and are poised to help generators receive the maximum value for their green gas production.
As a team, we have a solid track-record as a leader buying green power and gas from UK generators, supplying renewable energy to end consumers and trading renewable certificates.
A look back at the closing gas prices over the last year
As you can see from the graph above, since last October, gas prices have increased 70% in the past year from just under 44 p/therm to a peak of over 74 p/therm.
Key to the upward trend are the geopolitical forces at play. The influence of countries like Japan, China and the United States are important players and their import and export behaviour continues to have ramifications across Europe for both the gas and power markets. As an example, over the past year we have seen liquified natural gas (LNG) redirected to Asia, which has resulted in a squeeze for the UK and resultant gas price increases.
While closer to home, across northern Europe, we have seen extended outages of nuclear power plants, low wind output and poor hydrology, leading to increased gas demand.
It is clear that the increased demand for gas in the UK is linked to the closure of large thermal plants. As we approach this winter and begin to require heightened gas supplies, we are reminded of the last major cold snap in early 2018, which exemplified the volatility in the gas market. We saw prices spike more than 300% to the highest peak on 1 March 2018 (see graph below).
SmartestEnergy’s ‘Beast from the East’ day-ahead prices:
What is driving an interest in green gas specifically?
We see green gas as the next phase in decarbonisation, as the focus shifts towards tackling heat and transport. Green gas offers real flexibility and is increasingly used as carbon-neutral fuel (CNG) for the transport sector and converted on-demand into electricity for heat. It’s increasing adoption is helping to lessen our dependence on fossil fuel derived gas and it offers a ‘greener’ more sustainable option for businesses seeking a renewable energy supply. To find our more, contact our trading team directly.