What’s going on with the energy market?
UPDATED 19 December 2022
Our Energy Specialists have brought together what's happening in 2022. For 2023's energy news check out our blog: 2023-What's happening in the energy market?
The Chancellor has made changes (17 Nov) to the Energy Price Guarantee (EPG). The current EPG will run until 31 March 2023 and remains at an average of £2,500. In his Autumn Statement he announced that from 1 April 2023 the EPG level will rise to an average of £3,000 and continue for 12 months.
The National Grid has launched (4 Nov) its Demand Flexibility Service which will reward energy users for reducing their energy consumption during peak time events. The aim is to spread the demand for electricity this winter to avoid using polluting coal back-up generators. E.ON Next customers can get involved through our Energy Shift initiative.
The new Chancellor, made changes (17 Oct) to the Energy Price Guarantee (EPG) scheme. The EPG will now run until 31 March 2023. This is a change to the government's plan which had originally announced that the scheme would run for two years.
The National Grid has published (Oct 6) its winter outlook and has identified three possible scenarios for electricity supply this winter, but says that the base case remains that there will be enough electricity to match demand this coming winter. The National Grid said that there was an unlikely scenario that some UK homes could lose power if the energy crisis escalated across Europe this winter and disrupted supply.
The government announced (21 Sept) a new scheme that will see energy prices for non-domestic energy customers such as businesses, SME, charities and public sector organisations cut. The Energy Bill Relief Scheme (EBRS) will offer discounts for all firms for six months from 1 October. The government’s Energy Bill Relief Scheme will provide a discount on wholesale gas and electricity prices for all non-domestic customers.
Ofgem, the government and the National Grid.
On 24 May 2022 the energy regulator, Ofgem, said that the energy price cap, which limits how much energy providers can raise prices, is likely to increase to approximately £2,800, due to continued volatility in global gas prices. Ofgem’s estimate is based on a consumer with average consumption and paying by direct debit.
On 26 May 2022 the government announced that every household in the UK will get an energy bill discount of £400 in October as part of an updated package of measures to tackle electricity and gas prices. Households will see a discount of £66 applied to their energy bills in October and November, and £67 a month from December to March 2023 through the government's Energy Bills Support Scheme.
On 11 July 2022 the energy regulator Ofgem updated their assessment of energy prices and said that their May estimate, of a rise of £800 in October, now looked too low.
On 26 July 2022 the government's Business, Energy and Industrial Strategy Committee published a report calling on the government to update its energy bills support to help the most exposed households and consider introducing a social tariff.
On 4 August 2022 Ofgem announced that the price cap review period will move from six months to three months (quarterly). Ofgem says that the change is to reflect the most up to date and accurate energy prices.
On 26 August 2022 Ofgem announced that the price cap for customers on a standard variable tariff will increase to £3,549 if they pay by Direct Debit and to £3,764 if they pay any other way. For customers with a prepayment meter, the price cap will increase to £3,608.
On 8 September 2022 the government announced a new energy bills scheme, Energy Price Guarantee (EPG), that will reduce the impact of the planned price cap rise. The government also announced plans to move nuclear and renewable electricity generators to lower price contracts to cut bills.
On 21 September 2022 the government announced a new energy bills scheme to help support businesses. The Energy Bill Relief Scheme (EBRS) will help reduce the impact of energy price rises for non-domestic energy customers such as businesses, charities and public sector organisations for six months from 1 October.
On 6 October 2022 the National Grid has published its winter outlook and has identified three possible scenarios for electricity supply this winter, but says that the base case remains that there will be enough electricity in the UK to match demand this coming winter.
On 12 October 2022 the government announced plans to cap the revenue of renewable energy generators. The temporary cap, which will limit the amount generators can make, is set to be introduced in parliament as part of the Energy Prices Bill.
On 17 October 2022 the government made changes to the Energy Price Guarantee (EPG) scheme. The EPG will now run until 31 March 2023. This is a change to the government's plan which had originally announced that the scheme would run for two years.
On 4 November 2022 the National Grid launched its Demand Flexibility Service where customers are rewarded for reducing their energy consumption.
On 17 November 2022 the government announced that from 1 April 2023 the EPG level will rise to an average of £3,000 and continue for 12 months.
On 24 November 2022 Ofgem announced that the price cap will rise to £4,279 from 1 January 2023. It will not affect households as the government is limiting bills through the current Energy Price Guarantee scheme which sees the typical household paying £2,500 a year for energy until 31 March 2023.
On 19 December 2022 the government confirmed its support for customers in Northern Ireland and those who are 'off-grid'.
Global gas price volatility.
Increased demand for gas as the Covid pandemic eased coupled with the Russian invasion of Ukraine has seen global gas prices rise rapidly with concerns over supply. While the UK would not be directly impacted by supply disruption, as it imports less than 5% of its gas from Russia, it would be affected by prices rising on global markets as demand in Europe increased.
Gas prices have been rising throughout the year and jumped further (5 Sept 2022) after Russia announced that it would not reopen its main gas pipeline to Europe. Russia has been cutting flows through the Nord Stream 1 pipeline throughout the summer. Although the UK is not reliant on Nord Stream 1 for gas, the Kremlin's decision to squeeze supplies to Europe has driven up the overall cost of wholesale gas. Prices in the UK rose as much as 35% during trading on 5 Sept 2022.
Leaks discovered on both Nord Stream 1 & 2. Further volatility occurred in the wholesale gas market after suspected sabotage was discovered (26 Sept 2022) on the Nord Stream pipelines which led to gas security fears.