Irish wholesale energy prices may be volatile in 2018, according to a power supplier, after gas prices surged 38 per cent in December from their average level last year.
"We may be in for a volatile period ahead," Dublin-based Vayu said in its annual energy review, published on Thursday, noting that a recent spike in prices "shows how susceptible the market is to the supply picture" and that there is potential for "increased volatility going into 2018".
Irish wholesale prices were driven as Centrica, which owns Bord Gáis Energy in the Republic, closed its Rough storage facility in England during the summer, and following an unplanned outage at the Corrib gas field off Ireland’s west coast after odourless gas leaked into the supply network.
Wider energy prices were also underpinned as the Organisation of Petroleum Exporting Countries and non-Opec oil producers reined in supply.
Gas prices turned more volatile in December after an unplanned shutdown of the UK’s most important oil pipeline, Forties, which prompted a spike in wholesale power prices.
“Looking to 2018, the main price drivers of electricity will be energy commodities, demand on the system and the amount of renewable present in the fuel mix, as well as the introduction [on the island of Ireland] of the integrated single electricity (I-SEM) in May of next year,” Vayu said.
Vayu senior energy analyst Keith Donnelly said that if the euro, which advanced about 4 per cent against sterling in 2017, continued to perform well against the UK currency it could help Irish energy users.
“Generally speaking, for energy users in Ireland buying gas in euro, a potential weaker pound augurs well, as the majority of natural gas is still imported from the UK,” he said.
Mr Donnelly said overall power demand globally would be helped by continued “loose” monetary policy across central banks, low overall inflation, strong global trade and “encouraging fiscal policies in countries that have experienced many years of austerity”.
The International Monetary Fund is predicting 3.6 per cent global economic growth in 2017 and 3.7 per cent expansion in 2018, driven by surging activity in Europe, Japan, China and the United States.