Storms Isha and Jocelyn help drive wholesale gas prices to lowest for two years

Futures markets show the price of wholesale gas for delivery in February fell in the latest trading session by 3.5% to about €27.45 per megawatt hour, below the levels in the weeks before the invasion by Russia of Ukraine in late February 2022. 

Wholesale gas prices had soared to as much as €277 per megawatt hour in late August 2022 as Europe struggled to come terms with much reduced gas supplies from Russia and the possibility Russian pipeline supplies would end altogether. 

Ireland draws much of the gas from pipelines from the North Sea, which is used to generate almost all of  the electricity on the all-Ireland power market and is therefore not directly affected by the Russian-Ukraine conflict, in terms of security of supply. 

However, wholesale gas prices here and in Britain are still driven by the wider European gas markets.

The recent slide in the wholesale gas prices has helped to contribute to cuts in the energy bills for households and businesses, but how quickly prices will be cut to reflect the plunge in wholesale prices remains under scrutiny. 

European wholesale gas prices are also trading at about €28 per megawatt hour through the spring and summer months, but have plunged from about €55 just three months ago, according to futures markets.   

The first major Atlantic storms this winter have helped boost the amount of power generated by turbines, which should mean that less gas is required to run power stations. 

And also thanks to the new wind turbines installed in the past two years, Germany will this week likely post record levels of power generated from renewable sources. 

Europe is benefiting from record renewables power installations last year, together with massive gas stockpiling and a relatively mild winter — some cold snaps aside. 

With temperatures recovering, gas demand for heating and power generation should drop, helping to keep energy prices in check after a recent rebound. 

“European natural gas prices have softened significantly, mostly because this winter has largely been milder than normal,” according to Citigroup's energy research strategists Anthony Yuen and Maggie Xueting Lin.

“Europe should get through this winter with enough natural gas in storage,” the analysts said. 

British households could see their energy bills fall nearly 16% by spring as prices continue to ease from crisis levels, bringing relief to homes with stretched budgets, according to estimates from consultancy Cornwall Insight. 

• Irish Examiner. Additional reporting Bloomberg