Eneco market reports early April 2021

Energy costs: Over the past fortnight short term markets have seen extreme volatility with the Evergiven run aground in the Suez canal causing LNG supply concerns. Meanwhile, Suez combined with cold weather forecasts, high EUA carbon costs, continued OPEC production cuts and rising Coal prices, to sustain the recent gains made on the annuals markets. In the last few days, markets have again moved up due to global demand uncertainty (US financial stimulus versus further European lockdowns), expectations of persistent cold temperatures, and the realisation that it will take a few weeks to clear the Suez shipping backlogs.

 

Upside:
Supply outages  –Norwegian gas production outages will continue into late April.
Oil markets – OPEC have decided to extend production cuts until at least May.
Gas storage – European storage is at 30%, compared to 54% this time last year. However, the first injections of Spring have started.
Coal  – Prices peaked at $73/tonne before calming slightly, due to Australian supply issues.
Carbon costs –  EUAs maintained recent gains due to continued speculator activity and late compliance buying. UK emissions will start trading in mid-May.
Weather –  Colder temperatures are expected to continue until mid-April.
LNG – Suez has impacted deliveries due to Qatari delivery delays and spiking Asian prices.
Vaccine rollout – The UK’s programme continues apace and lockdown measure continue to ease, boosting demand and economic confidence.

Downside:
Lockdown – Europe has gone back into lockdown, excess supply capacity will help suppress our prices.

Could go either way:
Sterling – has maintained it’s strength against both the Dollar and Euro shielding the UK energy markets for some of the impact of oil, coal and carbon price increases. The continued rollout of the UK’s vaccination programme will influence its future direction.

Non-energy costs:

On the electricity side organisations will see further increases in pass through costs from both government and industry infrastructure providers from 2022 onwards due to pandemic-related demand destruction. Levies normally collected via unit rates have fallen short of expectations and have fed through to further increases in ROs, FiTs, EII and other transportation, distribution and renewable investment charges. Targeted Charging Review will now take affect from April 1st 2022, one year later than expected, but are now being built into longer term contracts. Revised projections are available on our website via the links below.

Is your organisation covered by the new Streamlined Energy and Carbon Reporting (SECR) scheme from the Environment Agency?

Designed to replace in part the Carbon Reduction Commitment (CRC) which ended in 2019 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. SECR requires 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.

If your organisation qualifies, participation in this scheme is mandatory. Eneco Consulting are happy to provide assistance with your regulatory obligations. Full details are available on our website on the link below.

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.

Eneco market information early April 2021

Gas and electricity prices from 2009 to date 

A copy of our environmental charges and Climate Change Levy rates from 2012 to date: Environmental Pass Through Charges and CCL with Definitions ppkWh 02.12.20

A copy of RO/CFD guidance document: RO_CFD_Guidance_Revised_July_2018

SECR: SECR EA Guidelines

TCR Charges (Targeted Charging Review): TCR Charges (Targeted Charging Review)