<img alt="" src="https://secure.inventive52intuitive.com/789350.png" style="display:none;">
Skip to content

Energy Focus - Winter 2022-23 Outlook

3 November 2022

Watch-on demand

Energy Focus: Winter 2022-23 Outlook

Our latest market update video provides the energy outlook as we approach the close of 2022 and into 2023.

Tridents Energy Risk Manager, Alexandra Mottershead, talks through and highlights the key price drivers within the different energy markets. Read the full video transcript below.


Gas and power demand will play a significant role in price direction over the winter months. Much of this will be driven by the weather. La Nina, in the southern Pacific Ocean, is expected to persist until February. La Nina events correlate with cooler weather in the Northern Hemisphere, with the strongest effect seen over North America and Northern Asia.

Several weather forecasting models are pointing to a milder start to winter for the UK and Europe. If this scenario emerges, this will help demand reduction targets. There is some evidence of demand destruction already emerging with European and UK power demand currently sitting below multi-year averages.

Exports will continue to add to the demand picture as the UK is currently set to remain a net power exporter to France until June 2023. Price spreads between UK and European gas hubs continue to incentivise gas exports to Europe and this pattern will almost certainly persist over winter.


Efforts to shore up gas supplies on the continent appear to be paying off with healthy European storage levels at the start of winter. Aggregated European gas storage has surpassed 90% fullness.  Increased Norwegian flows, and Europe’s ability to attract LNG cargos with high TTF prices, have helped the effort. Prices will need to remain at a premium to keep attracting LNG to Europe, as only around 30% of global LNG cargos are available to the spot market.

An additional 18 bcm of LNG is expected to arrive into Europe this winter. Increasing US LNG output will play a large role in this increased supply. Increasing US LNG output is driving US gas prices higher. Cooler winter weather in the US could push these prices even higher, and it remains to be seen if domestic price increases would impact US exports. Chinese LNG demand decreased by 22% between June and September but this could quickly change as a cold winter in Asia could increase gas demand by 9bcm.

Healthy nuclear availability in the UK is expected over the winter period. EDF, Drax and Uniper have all agreed contracts with National Grid to provide additional coal generation capacity, if required, this winter. In its recent winter outlook, National Grid expected adequate system margins this winter but did warn of potential for blackouts in the extreme circumstances modelled.

On the continent, French nuclear capacity is expected to increase steadily over winter. Ongoing strikes, and unexpected delays or outages, remain risk factors for returning capacity. Germany recently agreed to extend the life of some nuclear plants in order to help bolster European power supplies. 

Geopolitical Risk/Europe plans

In our previous report, we discussed the potential impacts of zero Nord Stream flows. In August, we saw this scenario emerge and prices reach record highs. The market remains sensitive to developments on the conflict. Recently, we saw UK gas markets spike 80p/therm in minutes following news of Ukrainian power outages. The gains were lost within the hour, but this highlights the potential for further volatility in the coming months.

The likelihood of Nord Stream 1 returning this winter remains minimal following damage sustained from recent explosions. This presents significant supply risk this winter, but also for winter 2023 as Europe will face its first summer replenishing gas storages without Nord Stream, a 39bcm deficit yoy. Flows via Ukraine and Turkstream continue, however, the ongoing spat between Gazprom and Ukraine’s Nafotgaz, regarding transit fees, continues to fuel fears of a complete supply cut off.

The EU recently agreed on measures to tackle high European energy costs including a windfall levy on non-gas power generators and mandatory demand cuts. The contentious topic of a gas price cap is still under discussion. With some large players, strongly opposed to any cap the EU will meet this week to discuss the plan further. The UK have also proposed capping renewable energy prices, but very little detail has been provided to date.

Wider Energy Complex

Global economic growth has entered a period of significant uncertainty and weakening macroeconomic conditions. The oil market has lost 40% of its value since early March. The value of the U.S dollar has appreciated to the highest level in over two decades adding pressure to commodities priced in dollars. 

Demand concerns have superseded supply issues with global demand only expected to grow by 2.6mbpd due to Chinese lockdowns and inflationary pressures. However, oil price declines have been limited by expectations of rising gas-to-oil switching during the winter period in both Europe and Asia.

The carbon market has depreciated by 35% since reaching an all-time high in mid-August. Losses have been driven by a recent return in auction supply, warm weather, and recession concerns. Discussions continue on potentially using the ETS to fund the EU’s REPowerEU plan. Proposals include the sale of EUAs held in the market stability reserve and front-loading permits, however, the EU parliament and council are keen to shield the Market Stability Reserve to safeguard the integrity of the EU ETS. Looking forward the forecast EUA price for 2023 is expected to average €70/tonne. 

Energy Outlook

What should customers do?

Adopting a long-term, flexible strategy remains the best tool to reduce the risk of purchasing at, or near to, market highs.

For larger energy users, this can be achieved with a flexible energy contract and comprehensive risk management strategy. For consumers who cannot access stand-alone flexible contracts, Trident’s framework solutions provide a facility for purchasing energy flexibly with multiple strategy options for varying risk appetites.

For any customers currently on default or variable rates, we would encourage you to agree a fixed contract ASAP to ensure you receive the maximum benefit from the governments business energy support package this winter. For flexible customers with unhedged volume, we would suggest looking to increase coverage for periods trading below the government maximum benefit levels. We expect an update on government support beyond March 2023 early in the new year.

We previously discussed the risk of suppliers being unable to price fixed contracts due to extreme market conditions. We expect markets to remain volatile, and illiquid, in the coming months and so we urge customers with fixed contracts to go to market well in advance of the renewal date.

That brings us to a close on this update. If you have any questions please feel free to contact us. You can also find the latest energy market commentary from our experts on the Trident Utilities website and social media platforms. Call our experts today on 0345 634 9500 or email enquiries@tridentutilities.co.uk

Talk to us

See how much we could save you

Please call our team on 0345 634 9500 or email us at info@tridentutilities.co.uk.