Business Energy Market Update: June 2024

May 2024 was a difficult month for the Energy market, when looking at the closing electricity prices for spot and forward contracts on Friday, the curve was up 15% across the board.

The story was much the same for gas although the rises were marginally softer. These rises are set starkly at odds with OFGEM’s price cap which of course, will fall from the first of July. The main price drivers through the month were mostly a result of continuing concerns over supply and due to unplanned outages. An unseasonably hot start to summer in most of Asia led to increased demand for gas for power resulting in reduced LNG shipments into Europe. Elsewhere gas flows into Easington have completely halted due to the need for urgent repairs on a pipeline carrying gas through the Sleipner Field. Roughly a third of gas imports for the whole of the UK flow through Easington and thankfully, at the time of writing repairs are expected to take just two days.

Our continued reliance on imported fossil fuels and the dramatic impact this facet of our energy system continues to have on our electricity and gas prices has become a target for Labour’s election manifesto. In the last few days Sir Keir Starmer has warned energy is now a matter of national security saying our current energy policy "opens our front door to Putin”, and that "heating our homes should not mean we accept dependence on Russia".

Labour’s pledge to create a Great British Energy Company is a far cry from their previous and costly policy of renationalisation but despite this, Energy Secretary Claire Coutinho labelled Labours plans as unfunded and “dangerous.” Great British Energy has been billed by Labour as a publicly owned entity which will give the British people true energy independence. The cornerstone of the policy is the pledge to make the UK a world leader in renewable energy technology, partly through the development floating offshore wind farms; although Labour insist, they will build renewable energy projects across the whole of the UK.

Whatever your opinion on the energy policy of the main parties might be, one barrier to the ‘greening’ the UK grid is the continuing issues around planning and local opposition for both largescale green energy projects such as the Sunnica project in Cambridgeshire and also the infrastructure needed to bring the power to where it’s needed; National Grid’s recent proposal for a high voltage overhead link between Grimsby and Walpole has been met with fury by locals as it traverses the Wolds, an area of natural beauty.

The unique way in which Great British Energy might be funded could certainly mean lower costs for future green energy projects and despite promising reforms to planning, the pioneering of floating offshore wind and the acceleration of some infrastructure projects, it is still unclear if Labour’s big plans for energy will be enough to have the impact on bills we all want to see.