There is no respite for sky-high Irish utility bills this winter as questions remain over whether Russia will turn off the gas to continental Europe, according to prices on the wholesale gas futures market.
Relief this week over Russia resuming supplies to the EU following the 10-days downtime for maintenance of the key Nord Stream 1 pipeline was short lived and prices have continued to trade at elevated levels.
Ireland gets about a quarter of its gas supplies from the Corrib field off the Mayo coast and most of the rest from the North Sea via interconnectors with Britain. The island therefore doesn’t directly tap gas supplies flowing westward from the Nord Stream 1 pipeline from Russia.
But Irish analysts and business leaders have long warned that Irish energy bills are nonetheless directly linked to what happens to Nord Stream 1 because wholesale market prices paid here still depend on the amount of gas flowing along the key continental pipeline.
On Friday, futures markets on Friday were still flashing red for Irish utility bills this winter. Continental European wholesale gas for delivery in October touched €164 per megawatt per hour, price levels that were unthinkable before the February 24 invasion of Ukraine. The October price was, however, down from the €184 per MW per hour touched last week at the height of the scare over Nord Stream 1 supplies.
Worse, wholesale gas market prices show little change for winter 2023, with an average delivery price only slightly lower at €161 per MW per hour.
For the all-Ireland electricity grid, there may be some sort of reprieve, however, as long as the wind blows strongly this winter. That’s because wind turbines can in some winter months account for around half of all the power generated on the grid.
But the Government, grid operators, households, and business leaders will not want to be relying on Atlantic winter storms to provide energy security for the island, should the economic war between the West and Russia over precious gas supplies flare again.
Gas-fuelled power generators from Larne to Cork for the most of the year are relied on to generate the electricity to keep the lights on, to heat offices and homes, provide the power for the huge number of pharmaceutical manufacturing plants and data centres, and to keep businesses open and the economy humming.
The economies of Europe and the US have already been highly stressed by the unleashing of inflation forces driven by gas, oil, and food price hikes from the Ukraine war.
On Thursday, the European Central Bank responded with its first interest rate hikes in over a decade, with more increases likely to come.
On Friday, there was a distress signal too from Europe’s manufacturing that could signal an industry-led recession, with the so-called flash results from the survey of purchasing managers showing a sharp contraction at factories this month.
“The eurozone is teetering on the brink of recession,” said Andrew Kenningham, chief Europe economist at Capital Economics, of the manufacturing survey findings.
