September 2022 Energy Market BriefPower and Gas Prices hit new all-time highs.

In August, we continued to see strong gas price rises across all tracked GB wholesale gas contracts in the month. Shorterterm as well as longer dated contracts further out on the forward curve all registered strong bullish price movements from July.

On average, seasonal gas contracts from winter 22 to summer 24 were 58.3% higher in August compared with the
previous month. The most significant average price rises concentrated across summer 23 to summer 24 (up 66.9% on average across the three seasons).

The influence of bullish near-term market fundamentals set a strong upward price direction for the forward curve to follow. The sensitive political landscape surrounding westward Nord Stream 1 flows continued to be a dominant market force in August, with flows on the pipeline to Germany meeting just 20% of its total export volume – at a time when European countries continue to refill gas storage facilities in time for the upcoming winter season.

August saw day-ahead power prices follow their gas counterpart upwards – 44.1% higher on average to sit at
£382.43/MWh. This represents a 252.0% rise compared to prices from the same period in 2021.

The strong upward momentum on near-term domestic gas prices set a bullish direction for power prices to follow.

The continuation of higher levels of exports via our interconnectors to Europe remained prevalent in August, as
interconnected markets such as France continues to observe higher power prices compared with GB on average.

Front-month power contracts (September and October 22) shared the price direction of their gas counterparts and dayahead power prices, subsequently rising 27.0% on average to sit at £408.09/MWh and £477.00/MWh, respectively.