Wholesale gas prices tumble as Europe prepares to
intervene in energy markets
European Commission says it is working ‘flat out’ on
emergency intervention and on longer-term structural reform
Alex Lawson
Energy correspondent
Tue 30 Aug
2022 19.12 BST
The
wholesale price of gas has dropped sharply in a rare respite from recent highs
on signs that Europe is preparing to intervene directly in energy markets.
The
European Commission said it was working “flat out” on an emergency package, and
on a longer-term “structural reform of the electricity market” to combat
soaring prices while efforts to fill gas storage facilities appear to be ahead
of schedule.
The
day-ahead UK wholesale gas price tumbled by more than 20% to 447p per therm on
Tuesday, while the month-ahead contract dropped by a quarter, to 473p per
therm.
Prices
eased from near record highs but are still 12 times higher than at the start of
2021, before the energy crisis began.
It came as
the business secretary, Kwasi Kwarteng, announced progress on efforts to reopen
the UK’s biggest gas storage facility. The energy group Centrica is working to
bring the Rough facility, located under the North Sea off the east Yorkshire
coast, back into use.
“After
months of work, the UK oil and gas regulator has today granted the required
approvals and consents,” Kwarteng said on Tuesday evening, announcing the green
light from the North Sea Transition Authority.
European
countries are rushing to fill their gas storage facilities before the winter,
amid fears that Russia may further reduce gas supplies. European gas storage
facilities are now almost 80% full on average, rapidly closing in on an EU
target for countries to hit 80% full by 1 November.
The German
economy minister Robert Habeck said he expected gas prices to fall soon as
Germany, Europe’s largest gas consumer, was making progress on its storage
targets and would not have to pay the high asking prices to continue
replenishing stocks.
Habeck also
reportedly told other European energy ministers that Germany is willing to
consider a European price cap on gas, a measure it has previously argued
against.
The
European Commission is working on as yet undefined emergency proposals to ease
the cost for households this winter, before a meeting of EU energy ministers on
9 September. A longer-term plan for market intervention appears to be more
advanced.
“It’s on
the tracks. We’re in such a price spike that it has opened up political space,”
a European diplomat told Agence France-Presse news agency, speaking on
condition of anonymity to explain the debate.
“The
European Commission will launch an impact assessment in the autumn and we can
expect a proposal by the start of next year,” he said.
The
commission’s president, Ursula von der Leyen, said on Monday that Brussels was
preparing an intervention to separate power prices from the soaring cost of
gas, in an effort to ensure electricity prices reflected cheaper renewable
energy.
Von der
Leyen’s intervention will pile pressure on the next UK prime minister to follow
suit and announce a package of measures to tackle bills. Last week, the
regulator Ofgem set the next energy industry price cap at £3,549, which will be
implemented in October.
Get set for
the working day – we'll point you to the all the business news and analysis you
need every morning
Privacy
Notice: Newsletters may contain info about charities, online ads, and content
funded by outside parties. For more information see our Privacy Policy. We use
Google reCaptcha to protect our website and the Google Privacy Policy and Terms
of Service apply.
Ofgem is
consulting on whether to decouple the wholesale price of electricity from the
price of gas.
The RBC
Europe analyst John Musk said: “It is clear, in our view, that current
electricity prices of €700-800 per megawatt hour are unsustainable and creating
windfalls for some generators.
“The
question is how long any reform will take to implement given the need to
maintain investor confidence in power. At current high power prices it may be
we see further windfall taxes or voluntary contributions, across Europe, from
generators in the interim period while longer term structural reforms are
designed and implemented.”
However,
there remains uncertainty over the short-term outlook for gas supplies.
Russia’s Gazprom will halt natural gas exports to Europe via its main Nord
Stream 1 pipeline for three days from Wednesday to carry out maintenance.
The
shut-off follows a 10-day maintenance period in July and the Nord Stream
pipeline had already been running at just a fifth of its normal capacity. The
interruptions to supply have caused fears that Russia could halt flows entirely
just as demand spikes in winter.
Separately,
on Tuesday one of France’s largest gas suppliers, Engie, said that Gazprom
would further reduce deliveries to the company, owing to a disagreement between
them on the application of some contracts. Deliveries for Engie from Gazprom
have decreased substantially since the beginning of the war in Ukraine.
In Austria,
Vienna’s main power company, Wien Energie, has asked the federal government for
billions of euros in credit to cover margin costs so it can keep trading on the
European power-futures market.
Sem comentários:
Enviar um comentário