With wholesale energy prices on the rise, you need to look to the future

A number of reasons why energy prices in the near term have risen significantly over the past few days. Namely the announcement of Britain’s intent to invoke article 50 for the process of exiting the European union no later than March 2017, which in turn has had a detrimental effect on the value of Sterling against the US dollar and euro. Add to that OPEC having agreed in principal on the production and stocking levels of oil has put bullish sentiment on world prices and National Grid have warned of tight capacity margins likely over the forthcoming weeks.

These market drivers have significantly impacted electricity and gas prices for winter 2016 in particular base load electricity prices exceeding £60/MW.

These price increases are for the present short term, as Summer 2017 forward prices are still relatively attractive with circa mid £40’s/MW BUT for how long? It won’t take much negative news to create further upward sentiment which will start to reflect across 2017 prices.

April 2017 contracts

Anyone that has a contract start date of April 2017 that have not secured their energy yet would be advised to contract their requirements sooner rather than wait in the hope of lower prices.

October 2017 contracts

Winter 2017 is increasing but as of today £48/MW price would be acceptable for most contracts and many buyers who have faced far higher prices in the past may consider this a bargain in comparison.

Flexible contracts

BAS would recommend anyone who have exposure through 2017 should consider hedging a significant element of their requirement through to 2018.

Finding the right price

In recent days we have tendered a number of contracts on our OpenView platform which have shown significant savings between suppliers. Using the live open reverse auction has managed to drive the prices down between suppliers and is particularly enhanced due to the market price volatility being seen.

Test the market

If you wish to test the market in order to review a forecasted future contract price, then speak to us and we will be able to arrange a ‘dummy’ pricing exercise using our technology with Openview, please contact us.

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