Wholesale energy prices have started to lower in 2023 thanks to several reasons, including:
The U.K. had a relatively mild winter over 2022/2023, which definitely helped manage our limited gas and electricity resources. There was a cold snap in December, but we never experienced any long-term snowfall or severe temperature drops. This ensured that there was enough energy to go around.
With less demand, energy prices steadied somewhat. While prices remained high, there was no need to increase the cost to spread the energy around more evenly.
This mild winter has had a positive effect on energy resources for the rest of the year, which has helped keep prices somewhat steady throughout the first half of 2023.
If we had experienced a severe winter, this would not have been the case.
Energy-efficient homes and businesses
Many business owners took on initiatives to make their workspaces more energy efficient over the winter of 2022/2023. These initiatives included installing insulation and double-glazed windows and also curbing energy usage throughout offices.
Helped by the mild winter, many businesses became more efficient and didn’t need large quantities of energy. Many have continued to support these initiatives, resulting in a higher number of efficient workspaces than ever.
Less demand for energy has helped lower the price of wholesale energy.
Development of the Russian invasion of Ukraine
Initially, the Russia-Ukraine conflict caused severe issues for energy supplies. Particularly because Russia cut off Nord Stream 1. This was a vital pipeline that passed through Germany that supplied a lot of Europe with gas. The loss of this reduced gas supplies throughout the entire continent, resulting in increased gas prices.
Since then, alternative gas supplies have been found. For example, many European countries have opened storage facilities and filled them with natural gas. These resources have created some degree of energy price stability.