Wholesale gas prices rose by 9% through June, the first monthly increase since November 2019.

Bord Gáis Energy noted that European hub prices have fallen to a level which incentivised US LNG cancellations, as gas systems struggled to absorb the historic volumes of LNG arriving onto European shores.

Gas Networks Ireland said that overall gas demand fell 8.3% in Q2 leading to an overall 2.3% decrease year on year in H1. Usage in domestic and small and medium businesses fell 29% as a result of Covid closures and warmer than usual conditions in March and April impacting heating demand.

This led to a 3.8% decrease in demand year on year for H1 in this segment. This group accounts for 96% of Ireland’s c.700,000 gas customers.

Gas demand from large energy users grew 6.7% in H1, reflecting resilience from the food and drink, life sciences and pharmaceutical sectors during the lockdown. Demand in power generation was also high through H1 and in particular Q2, with gas providing over 80% of power generation at times in recent weeks.

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All sectors, with the exception of hotel and leisure and associated industries such as laundry service providers, have returned to normal demand pattern for the time of year, according to Gas Networks Ireland.

Biomethane Gas

The first demand for renewable gas was also a feature of H1, with commercial customers now purchasing indigenous biomethane. The carbon neutral gas is produced in Nurney, Co Kildare, and enters the network in nearby Cush via the first dedicated renewable gas injection point. The facility has the capacity to heat 11,000 homes and is an important step in decarbonising the network.

For electricity, the average day-ahead price was 10% higher in June due to higher gas prices and carbon prices coupled with increased demand. Wind was relatively static month on month and filled 31% of outturn demand In Ireland.

David Grainger (pictured), energy trader with Bord Gáis Energy, commented: “We have seen a sharp rise in the Bord Gáis Energy Index in June, with a 14% increase, building on the strong gains made in May. Oil was a key driver as lockdown restrictions eased and lower supply from OPEC and the US helped to tighten the market. Oil gained 15% in the month.

“While the Index has made double digit gains for two months in a row, it remains 40% lower on a year to date basis highlighting the impact that oversupply and demand destruction is having on energy prices,” Grainger added.