Wholesale energy prices still falling

Irish companies could see further reductions in their energy costs this year with the likelihood of wholesale prices continuing to drop.

Latest data from leading independent energy supplier Vayu shows wholesale gas prices dropped by 4%, year-on-year, during March, with electricity prices down by 14%.

Increased natural gas shipments and strong supply from the North Sea have driven the declines, while the weakening in the value of the euro has had a significant impact on Irish gas prices.

Last year, the effect of falling wholesale prices was that larger-sized Irish companies saw reductions of between 9% and 18% in their energy costs, as gas prices on the wholesale market fell by 30%.

Vayu’s senior energy analyst, Gillian Lawler, said gas demand will fall significantly this summer, but downward price pressure could still be partially offset by supply and storage factors.

“Seasonal gas demand will be heading into a steep decline over the next couple of weeks with the start of the summer season. And, this year’s fall will be stronger than last year, when temperatures were much milder earlier on in the year. So, for the first time since 2010, any demand growth will be driven by low-contract gas prices,” she said.

Day-ahead prices are likely to remain relatively flat as a result of low storage levels, falling North Sea supply during scheduled maintenance in the second quarter and uncertainty from restrictions on gas production by the Dutch government and at the UK’s main storage facility, she added.