Wholesale Gas and Electricity prices started to give back some of the sharp gains from Wednesday, and we expect this to continue.

At a retail level, for the right business, we are now seeing 12 month contract prices below 20p/kWh and gas prices nudging 4p/kWh. Our view remains that there’s probably not much further for them to go this year, but that taking a 12 month view prices will be lower.

On the generation front; last week’s price was slightly higher than the week before, at £75.10/MWh. renewables were the dominant source however fossil fuels were only 2.6% less. With the Government committing significant money to renewables our concern is how those investments will be repaid, and specifically whether that will mean renewables are no longer a cheap option. There is also talk of the new mini nuclear generators which we believe to be very good news. Nuclear can be a clean, cheap and reliable source of energy – albeit you have to deal with the waste!

Gas: Gas prices fell yesterday due to a lower demand with wind generation expected to average at 8GWs/day over the next few weeks, 20% above seasonal norms. The linepack was expected to end 11.7MCM over supplied yesterday.   Power: Power prices fell yesterday in line with the gas market. Declines in the UK carbon market eased prices in the further out curve. Power imports from France have averaged 3.1GWs throughout July so far, 2.2GWs more than the previous year.    Oil: Oil prices were volatile yesterday as US GDP grew by 2.8% in Q2, double the growth rate of Q1. US inflation has remained higher than the Federal Reserves target of 2%, leading to interest rates remaining high.    Carbon (EU ETS): The ICE Dec-24 retraced its previous gains and fell to €66.81/t yesterday. This morning the contract has rebounded and is currently trading at €67.48/t.    Carbon (UKAs): The ICE Dec-24 closed at £39.78/t yesterday. This morning the contract has seen some support and is trading up at £40.37/t.

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