Robert Buckley, head of relationship development, Cornwall Insight
Decarbonisation destabilization.
Europe’s energy market is going through a war-driven restructuring away from Russian gas which will take years. Wholesale gas, coal and carbon prices will remain very high much longer than everyone expects, and consumer distress will be acute. The political pressure to allow extra carbon emissions, bale out consumers and tax producer windfalls will continue to intensify.
Investment strike
Despite very high energy prices, the power decarbonisation investment outlook will be tougher than for some years. The era of cheap money is over, and projects will require much more certainty and scrutiny before they are taken forward. Political risk will be amplified as we move towards a general election, with perceived producer windfalls squarely in the politicians’ sights.
Business leads the way on decarbonisation
Carbon disclosure rules and the dislocation of very high energy prices will drive businesses to decarbonise faster. Substantial improvements in efficiency, shifts into onsite energy production and power Purchase Price Allocation will start to erode the national markets for energy supply and distribution, with the regulatory and policy framework struggling to keep up.
Fintan Devenney, energy analyst at EnAppSys
With two new interconnectors due to come online in 2023, GB is set to be more connected to its neighbours than ever before. Therefore, it will be very important to have an awareness of events across the different European energy markets, especially during the winter when gas supplies could be tight.
Phil Hewitt, director of EnAppSys
In 2022 the energy markets were dominated by the Russian invasion of Ukraine, Europe has procured enough gas to get through this winter, however, next winter will be far more difficult as the Russians have now turned off the gas to Europe and this will make the market situation far worse.
