September's Energy News – gas rises and electricity is shocking

Friday, 8 October 2021

Energy News from Steve Wilson of Focus Business Consultancy

September saw a bit of a media frenzy about a sudden sharp increase in both electric and gas prices and – for the first time in many years – the energy market closed for the day after many of the UK’s bigger suppliers pulled-out of accepting any new contracts or renewals until things had stabilised. 

Here are the September energy news highlights behind this:

  • There was a major fire at the interconnector in Kent where the UK links to the (mainly nuclear-generated) electricity which we bring-in from France via a cable which runs across the English Channel.  Whilst it was completely offline for a period it is now anticipated to stay partially offline until March of 2022 spiking fears of shortages for the UK in the coming Winter months.
  • There were additionally some outages in the French system in September.
  • The Norwegian gas fields also had a few unplanned outages. Again the UK imports gas from Norway which is used to generate electricity in the UK.
  • Due to the increases in gas prices a large UK supplier re-started a coal-powered power station as coal was cheaper than gas to generate electricity.
  • Mild weather in the UK meant that electricity from wind-generation was low.
  • Asia has had quite a severe Winter which means that Japan have been buying-up a lot of the available Liquid Natural Gas which created a shortage.
  • There was a hurricane on the Gulf Coast of the USA which delayed oil tankers by several days.

Here is an overview of where the UK is in relation to energy and pricing:

  • Energy prices closely follow the price patterns of other material prices like oil, wood, steel, carbon etc.
  • Prices have been steadily increasing since February 2021 and are expected to continue to rise until Spring/Summer of 2022.
  • Recently the UK’s “grid” (for electricity) has been running at closer to capacity than is desired at this time of year – a cold snap or a harsh Winter coupled with a further pandemic lockdown could put real pressure on the grid’s ability to cope.
  • Geo-political events also impact energy prices and confidence eg Brexit issues, the UK winning or losing major contracts etc.

All of the above, whilst not particularly positive, help illustrate where having a competent energy consultant and brokerage involved to discuss your energy requirements and source the market for the best available contracts for you can be of administrative and financial benefit.

This leaves you to do what you do best – running YOUR business.

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