Gas and electricity prices to rise ‘only slightly’

All-Ireland electricity prices will likely rise only slightly this year, after falling sharply in 2016, a supplier to the Irish market has predicted.

Gas prices will also likely tick slightly higher despite storage and stocks only recovering by the spring, said Keith Donnelly, analyst at Vayu Energy, of Spanish utility Gas Natural Fenosa which also supplies industrial and commercial customers in the UK and the Netherlands.

Opec’s pledge to curtail supply will, however, remain a key factor in determining Irish power and gas prices this year, Mr Donnelly said.

The average wholesale price of electricity slid almost 18% last year, according to Vayhu.

Meanwhile, the cold snap across the continent has sent electricity prices to the highest level in almost a decade, in a market already characterised by power plant outages and worker strikes.

German and Belgian power prices for next-day delivery jumped to the highest since 2008, while those for France rose to a six-week high.

Temperatures in northwest Europe are forecast to drop to 5C below the 30-year average this week.

The cold is set to push French maximum electricity demand up 17% by Thursday from yesterday’s level and coincides with low hydro availability after the driest December since 1959 and extended nuclear reactor outages.

Freezing weather had already forced flight cancellations in Frankfurt, triggered blackouts in Switzerland and restricted shipping traffic on ice-choked rivers.

German power rose to €90.50 per megawatt-hour, the highest since November 2008 for day-ahead prices, broker data show. Belgian prices climbed to the highest since May 2008, at €110 per MW-hour.

German and Czech day-ahead rates settled at the highest since February 2012 at auctions held yesterday.

Scandinavia polar air is set to bring icy conditions to some areas in Germany, with temperatures seen falling to -20C in some mountain regions, Germany’s national forecaster said.

Temperatures in northwestern Europe are forecast to average -0.5C today, 4.25C below temperatures over the past 10 years. German wind generation is set to plunge.

Output is forecast to average 3.9 gigawatts per day over the next seven days compared with a one-month daily average of 15 gigawatts.

* Additional reporting Bloomberg