Published: 22 February 2024

Energy Hub – Powered by GET – February 2024

Monthly electricity stats

In January, gas was the primary source of electricity generation, representing 35.7% of the total. Wind followed closely behind at 33.5%. A significant 47% of the electricity produced in January came from zero-carbon sources, reaching a peak of 83% on January 1st at 9:30pm. Throughout the month, a total of 27TWh of electricity flowed through the network, equivalent to 27 billion washing machine cycles. Demand for electricity peaked on 15 January at 5:30pm.


Temperatures have been consistently above seasonal norms so far this month, signalling the arrival of spring. However, the latest forecasts indicate a drop in temperatures over the weekend, with temperatures expected to be a few degrees below seasonal norms. This sudden change may come as a shock, given the recent mild weather.

The good news is that this cooler weather will be short-lived, with temperatures predicted to return to around or just above seasonal norms at the beginning of March. Additionally, wind speeds have been favourable, leading to healthy electricity generation.

The combination of milder temperatures and robust renewable energy production has contributed to a bearish market sentiment and added further pressure on prices.


European gas storage levels are gradually decreasing, with minimal drawdowns of approximately 0.1-0.2% per day observed in the past week. Currently, European gas storage is slightly below 66% full, which is significantly higher than the 5-year average. This surplus in gas storage may be contributing to the downward pressure on near-curve NBP contracts and reinforcing bearish market sentiment.

Comparatively, at this time last year, gas storage levels were at 64% capacity, indicating a slight improvement. If the predicted mild weather in March materializes, we could potentially enter the summer injection period with storage levels just below 60% capacity.


Abundant supply is currently keeping spot LNG prices in Asia at their lowest level in seven months, a trend that is defying typical seasonal patterns where prices tend to spike during peak winter months. Despite the onset of peak winter in North Asia, for the third consecutive week, spot LNG prices in Asia have remained below the $10/MMBtu threshold. This can be attributed to comfortable inventories, reduced demand, and the high volume of exports from major LNG exporters such as the U.S., Australia, and Qatar.

In December, Asia saw record-high LNG imports, with China surpassing Japan as the top importer due to lower spot prices incentivizing purchases. The increase in supply, particularly from the United States and Australia, has contributed to the current market conditions. U.S. LNG exports reached a record high in December and the second-largest volumes in January, according to recent data.

Meanwhile, in Europe, demand for natural gas remains subdued as the industry remains cautious about increasing consumption. Although prices are now significantly lower than the record highs seen in 2022, Europe seems to have overcome the worst of the energy crisis. However, the high volatility in gas futures prices, along with uncertainties such as geopolitical tensions in the Middle East and the U.S. pausing new LNG export project approvals, continue to pose concerns for European industrial gas customers.


ScottishPower has announced contract opportunities worth £5.4 billion over the next decade to support its electricity network ambitions and contribute to a net zero future. These contracts, offered by the integrated energy company, will focus on transmission projects in central and southern Scotland. The projects will involve the construction of new high voltage substations, overhead lines, as well as design, engineering, construction, and electrical works. This work is crucial in connecting 80-85 GW of clean renewable energy to Great Britain’s transmission system, facilitating the movement of more green energy across the country and reducing the UK’s dependence on fossil fuels.

The need for significant investment is evident, as Octopus recently announced plans to invest overseas due to delays in connecting generation projects to the grid. Gregg Jackson, the Chief Executive, highlighted the challenges faced, stating, “There’s a solar farm we want to build in County Durham, but we won’t get a grid connection until 2037. This delay of 13 years hinders our ability to deploy capital effectively. Meanwhile, we can invest in projects in other countries.” These comments come despite Ofgem having recently changed the rules so that energy generation projects under development will be forced out of the queue for connection to the grid if they did not meet strict milestones in their development.

In late January, the European Commission announced the allocation of €594 million from the Connecting Europe Facility (CEF) to 8 cross-border energy infrastructure projects that have been designated as Projects of Common Interest for 2022. This significant investment is a key component of the EU’s comprehensive strategy to decarbonize the energy sector and meet the greenhouse gas emission reduction targets set forth in the European Green Deal.

These projects will play a crucial role in establishing a unified carbon value chain across the EU, aligning with the Commission’s ongoing efforts to develop a new strategy for industrial carbon management. By supporting these initiatives, the Commission aims to make substantial progress towards achieving its ambitious climate goals.

Geopolitical drives

Recent official statistics released at the beginning of February have confirmed that the UK has successfully reduced its emissions by 50% between 1990 and 2022. This achievement marks the UK as the first major economy to halve its emissions, all while experiencing a remarkable 79% growth in its economy. In comparison, France has only managed to reduce its emissions by 23%.

Renewable energy sources have played a significant role in driving these reductions. In 2010, a mere 7% of the UK’s total energy consumption could be attributed to renewable energy. However, this figure has now surged to an impressive 40%. This achievement sets a positive example for other nations to follow in the global fight against climate change.

Labour has cut its green investment plans by half, ending weeks of speculation and confirming the biggest and most controversial U-turn of Keir Starmer’s leadership. In a move that prompted an angry response from environmental groups, unions and some in the energy sector, Starmer and Rachel Reeves, the shadow chancellor, jointly announced they would slash the green prosperity plan from £28bn a year to under £15bn – only a third of which would be new money.  Whilst this protects them against a backlist of Conservative attached on the level of borrowing. One must weigh up the level of cost now, versus the level of cost for not taking this policy forward and the future cost we may incur. One of the main justifications was interest rates. For example; the cuts will mean the party reducing its targets for the number of properties it can insulate from 19 million to 5 million over its first term.

The United States and the European Union failed again to reach a trade deal on critical minerals at last week’s bilateral talks in Washington.  The Europeans still have “outstanding issues” with the Biden Administration’s Inflation Reduction Act, which links electric vehicle subsidies to the sourcing of batteries and their mineral inputs. More talks are planned as both sides look for a comprehensive agreement to help reduce their reliance on supply chains dominated by China.

Oil majors are targeting new oil fields that can be profitable even if oil prices fall to about $30 per barrel, using a third year of rising demand to reshape portfolios amid uncertainty over the industry’s future. Investors have not returned to oil stocks despite recent high earnings. Even the world’s lowest-cost oil producer, Saudi Aramco, has joined the rush to cut costs. The shift to fields with favourable break-even points follows deeper and more frequent boom-cycles in the last decade. It also reflects executives’ belief that current high prices may not last.


In light of recent trends and current conditions, it is evident that we are experiencing another unseasonably warm winter with strong renewable energy generation in the UK, Europe, and Asia. As a result, prices have been steadily decreasing. However, despite this positive development, we are still 50% above historical average prices compared to before the Russian invasion. The high commodity prices have also impacted third-party charges, as they are partly calculated based on commodity usage and prices. This has led to increased costs in maintenance, transportation, and parts due to the interconnected nature of energy costs.

We anticipate that Ofgem will announce a 15% reduction in the domestic price cap tomorrow at 7am. While this is a step in the right direction, I believe further reductions are necessary, especially considering the high consumption levels during the winter months. In my view, Ofgem should consider eliminating the price cap altogether, as it has inadvertently allowed suppliers to form a cartel and manipulate prices.

Although prices have somewhat stabilized, there remains significant volatility in gas futures prices compared to historical averages. Uncertainties such as geopolitical tensions in the Middle East and the U.S. pausing new LNG export projects have contributed to this instability. Additionally, the lack of additional capacity is a persistent concern that must be addressed.

In conclusion, while there have been positive developments in the energy market, challenges remain that require careful consideration and proactive measures to ensure stability and affordability for consumers and businesses alike.

If you would like a more in-depth discussion on any of the points raised, please don’t hesitate to get in contact on 02476308830 or email on

Victor Levison.