TEC Market Update

TEC Market Update

Despite a couple of cold spells, unseasonably mild weather in Europe and Asia so far this winter has somewhat rescued the European energy complex. High prices had attracted a large number of Liquefied Natural Gas (LNG) cargoes, and supplies remain healthy, as do gas storage inventories. Risks remain, and to balance, Europe needs to discourage energy demand growth, but attract LNG, both of which potentially support prices.

• Chinese gas demand will likely return over the year, reducing LNG availability to Europe.
• Freeport LNG in the United States returns, boosting global supply
• French nuclear generation has recovered from summer lows, further reducing fossil fuel demand, but remains a risk going forward
• We need to watch if industrial demand recovers with the lower prices

Inevitability in a persistently high market the same approach to hedging that protected so many members from the worst prices in 2022, will unavoidably lead to higher prices in 2023. There is every likelihood that this year will bring as much volatility and uncertainty as did last year. As such, TEC has been actively contracting volumes for 2023 to lower buying prices where possible, against an objective to manage risk and provide budget certainty.