Energy costs: Short term energy markets (Day Ahead to September delivery) tracked the fortunes of oil over the last fortnight, crashing to all-time lows only to recover in recent days. While longer term markets (for delivery Winter 2020 onwards) more cautiously fell back to February 2020 levels (themselves a 13 year low), perhaps restrained by the extension of French nuclear outages over the next couple of years. LNG prices in the Far East fell even further, prompting more deliveries to Europe. As mainland Europe starts to emerge from lockdown and consumption increases further falls seem unlikely.
Upside:
Outages – The markets continue to be affected by a variety of outages across the continent including EDF’s continued French nuclear problems.
Demand – Demand across the continent is likely to increase as the mainland emerges from lockdown. Globally it is expected to be 5-6% down in 2020.
Coal/Oil Markets – Coal and oil markets may recover further as Europe reopens for business.
Downside:
Carbon costs – EUA’s remain low as carbon emissions fall with the demand slump.
Gas Storage – This remains significantly high across Europe at 57% fullness; compared to 43% fullness this time last year.
Temperatures – Temperatures are likely to be above seasonal norms over the coming fortnight.
Renewable Generation – Wind/solar output are expected to be healthy.
LNG– Prices in the Far East fell further sending more deliveries to Europe.
Could Go Either Way:
Sterling – Has recovered slightly from the initial pandemic related slump as investors sought safe haven in the dollar and euro. However, with Brexit negotiations stalling this may be short lived.
Non-energy costs:
On the electricity side organisations will see further increases in pass through costs from both government and industry infrastructure providers in the coming months as distribution, Electricity Market Reform (EMR),Capacity Market and Energy Intensive Industries (EII) charges are ramped up. Revised non-energy cost predictions are awaited, although delayed by the pandemic.
Climate change levy (CCL) again change on April 1st. Please see the attached pass through charge information for details. Your CCA related CCL exemption rates will change at the same time (Gas to 81%, Electricity to 92%). Please ensure your PP11 forms are updated and sent through.
Is your organisation covered by the new Streamlined Energy and Carbon Reporting (SECR) scheme?
Designed to replace in part the Carbon Reduction Commitment (CRC) which ends this year and to follow on from the energy savings recommendations generated by ESOS compliance. Note, SECR will cover a wider scope of organisations than CRC and ESOS do. Full details are attached below.
SECR will require all large enterprises to disclose within their annual financial filing obligations to Companies House, their greenhouse gas emissions, energy usage (from gas, electricity and transportation as a minimum), energy efficiency actions and progress against at least one intensity ratio.
The scheme came into effect on April 1st, 2019 and will be required to be included in the first set of accounts published for financial years starting after this date.
The scheme covers publicly quoted companies (extending their current disclosure requirements) and UK incorporated companies or LLPs with two or more of the following.
- More than 250 employees
- A turnover in excess of £36 million
- A balance sheet in excess of £18 million.
UK subsidiaries, who meet the eligibility criteria, but are covered by a parent group’s report (unless the parent group is registered outside the UK) and companies using less than 40,000 kWh of energy during the reporting year do not have to provide disclosure. Note the reporting year should be aligned to your financial year.
Are you eligible for an EII rebate?
Under current rules, if you qualify at an industry sector level and your business passes the 20% electricity intensity test you may qualify for exemption to CFD and RO charges. Please see the attached Government RO/CFD guidance document and update and give Abby a call on the main number to discuss this further.
A copy of our detailed market report is available: Eneco Market Information early May 2020
Gas and electricity prices from 2009 to date are available here: Eneco Gas and Electricity Pricing Trends Sept 2009 to early May 2020
A copy of our environmental charges and Climate Change Levy rates from 2012 to date: Environmental Pass Through Charges and CCL ppkWh Updated 25.03.20 (1)
A copy of RO/CFD guidance document: RO_CFD_Guidance_Revised_July_2018
SECR: SECR EA Guidelines
