October marked the first month of the Winter-23 season which came with several weather warnings of differing severity across the month, and vast amounts of rain.
Early October, yellow weather warnings were announced for the West Coast of Scotland with heavy and persistent rain expected. This was just a week after Scotland were dealing with the effects of Storm Agnus, which brought heavy rainfall to Aberdeenshire. Despite this, the electricity market remained supressed; LNG cargoes were still destined for the UK to keep gas supply topped up and windspeeds remained 20% above seasonal norms, and solar also exceeding expectations with unseasonably warm weather following the rain.
Mid-October we saw the ongoing Israel-Hamas conflict worsen. This shocked market commodities upwards due to Israel closing the Tamar gas field. The rising tensions in the middle east were combined with the Balti connector gas pipeline (Linking Estonia with Finland) shutting down after a sudden drop in pressure, which followed by inspections where damage was found. There was speculation whether the damage was accidental or deliberate, which prompted further fears in the market and increased power prices across the seasons. During the space of 5 days, we saw a 24% increase in the Summer 24 season.
From 18-21st October, Storm Babet brought exceptional rainfall to parts of Eastern Scotland with 150 to 200mm falling in the wettest areas, causing the Met Office to issue two red warnings for rain. For the county of Angus – coinciding with this red warning area – 19 October 2023 was, by a wide margin, the wettest day on record in a series from 1891. Hundreds of homes and businesses were flooded with the town of Brechin severely affected after defences were overtopped by the river South Esk. Over 30,000 homes in northern Scotland lost power during the storm and significant damage was caused to infrastructure in some areas, including hydro schemes.
The end of October brought strong and persistent windspeeds which suppressed the market and removed most of any gains which were made mid-month. There is speculation that this winter will be an El Nino event. Typically, this brings a wet weather followed by cold weather. We’re certainly seeing the wet weather and if El Nino comes to fruition, it’s possible we’ll experience cold weather early 2024 which could boost power prices. As with everything in the market, waiting for El Nino is a gamble which may or may not pay off.
The Greenspan Agency produce the report on a best endeavours basis and has been supplied for your interest; the facts in this report are for background information and should not be relied upon exclusively for decision making.
If you have any queries about the content in this report, please contact amy@greenspanenergy.com or lara@greenspanenergy.com.
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