In the past couple of years, the energy market has been incredibly rocky, and everyone, from suppliers to those in business energy procurement has struggled to grasp what is happening. From a global pandemic to the Russian invasion of Ukraine to Brexit, it’s fair to say things have been less than stable. But what does the 2023 energy market look like, and is it going to be better than the previous few years? We take a look below.
The Gas Market
At the beginning of last year, the gas market was affected by a strain in supplies from Russia to much of Europe. This led to an increased demand and issues in the UK. However, with a shift in storage capabilities and initiatives that reduce demand, the outlook for 2023 is more optimistic.
Though more optimistic, the gas market is not without uncertainty going into 2023.
As an incredibly weather-driven market, demand will increase as the weather gets colder in February and March, meaning we may see trouble.
As for prices, it is almost certain that we won’t be seeing a reduction back to the levels they once were, and there is currently a 50% premium on even the lowest prices in the UK.
Nuclear Availability
French nuclear availability has impacted the cost of power in general. The issues stem from a backlog of maintenance and industrial action which has left a loss in the availability of this kind of power. This then leads to an increase in energy costs in the UK as we, too, use this power source.
The nuclear backlog is expected to even back out into 2023, so we remain optimistic too.
The Oil Market
Fossil fuels, on the whole have been significantly affected by the war in Ukraine, and as such, we’re likely to see further challenges in the oil market in 2023. Though we may see production growth, the oil economy is currently weak with prices lower than they were in 2022.
OPEC, the biggest oil producer in the world, along with the US, have significant control over prices. So, provided that production is ahead of consumption, the prices should remain stable, and we should see more growth in the coming years.
Coal and Carbon Supply
The generation of renewable energy has seen a small drop in demand for coal. Still, due to renewables unreliability (mainly those kinds that are affected by the weather), this loss in demand is expected to plateau throughout 2023. Prices will remain volatile throughout the year but, it will be less volatile than the prices we saw in 2022.
As for carbon, is much of the same in 2023, with slightly fewer volatile prices and a small decrease in demand. This could influence industrial output but is not likely to lead to a sustained downturn in 2023.
Conclusion: A Cause for Optimism
The energy market for 2023 is a cause for optimism if only very cautious optimism. After a miasma of volatility in many areas due to pandemics, wars, and Brexit, we can expect more stability in the coming months and even hope for growth in the next few years.
Global demand for more renewable energy may affect areas that may remain slightly subdued, like coal and carbon. Still, the loss of demand is not likely to be significant enough to cause alarm.
On the whole, we should remain vigilant. With an economic recession looking likely, there could still be wholly unpredictable and dramatic changes in the market yet.
