The UK and the rest of Europe may never return to its reliance on Russian gas and oil thanks to increased global imports of LNG, new LNG terminals as well as storage coming online. Greener options such as solar, wind and hydro have also aided in this transition, according to a new report by energy and sustainability consultancy Advantage Utilities.
Uncertainty and volatility are always present in the energy market. This means it is important for businesses in the North of all sizes and sectors to remain informed about what could affect energy budgets in order to drive smarter decisions.
The new Energy Market Report by Advantage Utilities takes a look at key factors driving energy prices in 2023. It highlights Europe’s accelerated transition away from Russian gas reliance over the last 12 months as a significant step, expedited by the ongoing conflict between Russia and Ukraine.
The report notes that this transition has been aided by more LNG imports into Europe and new terminals coming online, including Germany’s first ever LNG terminal.
These factors combined with natural gas exploration, increased nuclear output, temporarily restarted coal production and expedited growth in greener options, all point towards a brighter future ahead. The situation today is far more optimistic thanks to these measures and offers a stark contrast to when fears of Russian gas shortages were widespread throughout Europe.
Mother Nature deserves some credit too, the report suggests, as Europe experienced a very mild winter which in turn helped keep gas storages at near capacity. This was helped by an influx of LNG arrivals, which helped keep storage levels well away from potential panic. It is also worth noting that lower LNG imports and demand in Asia, especially from China who were still under very strict covid measures, also had a significant impact.
Commenting on the new report, Andrew Grover, Chief Executive Officer at Advantage Utilities, said, “Overall, the current sentiment regarding the European energy market is encouraging. It’s evident that with backs to the wall, Europe found itself able to navigate the precarious situation. This in turn should provide confidence that Europe and the UK can cope into a second winter and beyond, on the assumption that we never see a return to Russian gas and oil,”
However, Andrew is keen to point out that the UK and Europe are not out of the woods yet.
“It is certainly no time to sit on our laurels. Instead, the requirement will be to continue providing much needed funding for exploration into renewables, nuclear and hydrogen. In order to entice new players to the market, it is conceivable that in time we could see a reflection of this included in taxes and levies added to future energy bills,” he says.
Looking ahead, the report predicts a further reduction in Russian gas exports to Europe in 2023, as well as new LNG projects coming online, and the possible return of U.S. Freeports facilities.
It also explores the ‘new normal’ for energy pricing following the energy price rollercoaster of recent months and the likely impact of the UK government’s newly announced Energy Bill Discount Scheme (EBDS).