Irish energy prices could rise this winter following the closure of a key natural gas storage site in Britain, one supplier has warned.
UK group Centrica has closed its natural gas storage facility at Rough in England in a move that could lead to volatile prices in coming months.
Energy supplier Vayu predicted on Wednesday that the lack of storage would create greater uncertainty about gas prices during the winter.
The company's chief operating officer, Liam Faulkner, pointed out that this would be the first winter without gas storage for the first time in 30 years.
“The risk now is that the market becomes nervous and reacts to every change in temperature and demand and supply, causing prices to spike this winter and become more volatile, pushing the delivered cost for businesses upwards and almost definitely making them unpredictable,” he said.
Demand
While Shell's Corrib field meets 60 per cent of demand, Ireland still imports natural gas from Britain. The fuel is used to generate much of the electricity used here, so movements in its price have a knock-on effect through the energy market.
Centrica, which owns Bord Gáis Energy in the Republic, closed Rough this month as the facility had reached the end of its life and would have cost too much to rebuild.
There are a number of other factors affecting prices, according to Mr Faulkner. A glut of liquid natural gas on world markets is helping to keep costs down while sterling’s weakness makes the fuel more affordable for Irish busineses.
In the longer term, Brexit could also hit energy prices here. "A worst-case scenario would be a tariff on gas imports," Mr Fualkner noted, but he stressed that it was not possible to predict the final outcome.
Vayu’s mid-year energy report shows that gas prices were 42 per cent higher in the first six months of 2017 at 43.17 pence sterling a therm (the unit in which the fuel is sold) than during the same period in 2016. Average wholesale electricity prices were up 26 per cent.
