top of page

Energy Update – Q4 2022

Updated: Jan 18, 2023

Energy Buying Information for Hoteliers

With the war continuing in Ukraine, Energy market rates remain painfully high. We strongly advise hotels to obtain professional support and guidance when managing this category.

Outlook & Recommendations

Energy prices across Europe and the UK have fallen recently due to price cap and levy tax proposals made by the EU and UK governments. Gas storage sits at comfortable levels, with countries reaching the 80% 1st November requirement mandated by the EU. Liquid natural gas imports remain extremely high and have helped to partially fill the gap reduced Russian supply left in Europe’s supply mix. Despite a much healthier winter outlook, it remains uncertain whether Russia will reduce supply further over the coming months with Nord Stream One remaining offline. Further escalations this week involving sabotage on the Nord Stream 1 & 2 pipelines and Russia’s threat of international sanctions on Ukraine’s Naftogas, indicates supply into Europe could dramatically reduce soon.

Ukraine’s new counter-offensive places Putin and Russia on the back foot. Last week, Putin threatened the west with nuclear action and declared partial conscription by calling up 300,000 reserves. If Russia does decide to weaponize gas and reduce supply further, this could impact Summer contracts as storage sits will require replenishing in readiness for next winter.

For the best avoidance of risk, it would be recommended to secure a contract as soon as possible with extreme volatility still possible if things escalate further in Ukraine and across Europe. To reduce the burden of the strength shown for contracts in the closer term, it is advised to contract further out to reduce pricing and spread the risk as longer-term contracts continue to represent better value.

Utility Trading Graphs

Market Conditions / Price Drivers:

Liz Truss Energy Price Cap – Electricity and gas prices to be capped for 6 months from 1 October. Gas to be capped at £75/MWh or 219.80 p/therm. Electricity to be capped at £211/MWH. After the initial 6-month scheme, the government will provide ongoing focused support for “vulnerable” industries. There will be a review in 3 months’ time to consider where this should be targeted to make sure those most in need get support.

EU measures – The EU’s initial proposal to tackle the winter energy crisis includes a windfall tax on non-gas power plants, a temporary windfall tax on fossil fuel firms, and an electricity demand cut.

Windfall tax on non-gas power plants - Revenues are to be capped at €180/MWh for nuclear, wind, solar, lignite, oil, biomass and some hydropower plants. Set to raise €117bn.

Temporary windfall tax on fossil fuel firms - The EU wants companies that have made bumper profits from selling fossil fuels at record prices to make a financial contribution to help citizens and industries. EU countries would introduce a temporary windfall profit levy for oil, gas, coal and refining companies.

Electricity Demand Cut - EU proposal would also impose a mandatory 5% target for countries to cut peak electricity consumption (the 10% hours of highest demand) this winter, to ensure Europe has enough fuel to last the colder months.

Russian Gas supply – Following the maintenance period from 31-August to 2nd September, Gazprom has suspended flows of gas to Europe via Nord Stream 1. The move was largely expected and priced into markets, however, could cause longer term concerns if storage depletes quickly. Gazprom cited the pipeline would not flow until sanctions are reversed.

Russia has already reduced flows to Italy, Poland, Bulgaria, the Netherlands, Denmark , Finland, Latvia and now France. Many are speculating Russia is prepared to weaponize gas to influence European political decisions including Ukraine’s entry into the EU.

Gazprom has stated that the delivery of the turbine required to increase Nord Stream1 flows to Europe is “impossible” due to sanctions applied against Russia. Germany, where the repaired turbine is currently located and awaiting export, has directly accused Russia of blocking the delivery to limit gas supplies to Europe. The EU are pre-empting the worst and preparing actions with the expectation that Russian gas will not resume from September onwards.

News broke of the “sabotage” on three separate sections of the NordStream 1 and 2 pipelines; Polish authorities said the damage - believed to be quite substantial - was not coincidental, whilst German authorities opened an investigation into the causes of the leaks. Although the gas pipelines are not currently in operation, they do still contain gas under pressure, and both aviation and naval vessels were warned to stay clear of the affected area near Denmark.

European Storage - Strong injections into storage has seen total European levels exceed the October target level. This comfort may also help to soften some of the sentiment. Continued injections in September and October are the norm, however, may be difficult if NS1 remains closed, the market may be less anxious however than earlier in the summer.

Eerns Energy LNG Terminal – The first gas volumes from the new Eerns Energy LNG terminal in the Netherlands began to flow last week, helping to ease supply concerns at the front end of the market as total potential LNG capacity is increased.


Energy Bill Relief Scheme announced on 21st September 2022 by Kwasi Kwarteng

  • Electricity and gas prices to be capped for 6 months from 1 October.

  • Gas to be capped at £75/MWh (7.5 p/kWh) or 219.80 p/therm.

  • Electricity to be capped at £211/MWh (21.1 p/kWh).

  • After this initial 6 month scheme, the government will provide ongoing focused support for “vulnerable” industries. These industries are not specified as yet.

  • There will be a review in 3 months’ time to consider where this should be targeted to make sure those most in need get support.

Circa 45% discount to market prices prior to bank holiday and level in line with market prices circa April/May 2022.

Eligible for all companies on variable and flexible tariffs or fixed on or after 1 April.

Discount is automatically applied to bills with savings seen from October, but realised in November.

There is a maximum discount, expected to be around £405/MWh for electricity and £115/MWh for gas, subject to wholesale market developments. This would result in a wholesale price of £616/MWh for electricity and 556.83 p/therm for gas. Customers with effective prices close to the maximum discount level may wish to consider hedging to ensure the best chance of achieving the full discount.

Final details of the maximum discount is set to be announced on 30th September 2022.

This information is provided by our HCC Market partners, Consultus Assured Energy, who are part of The Consultus International Group. Any information provided is given on an advisory basis and both HCC and Assured/Consultus are in no way liable for any action taken by the reader with regards to their energy purchasing.

If you need help with your energy tender, then take advantage of our Energy Tender Management Service. Full management of your tender and switchover for just £99 (incl. VAT).

Also, take advantage of our promo code ECASHVIP to get a free audit of your last 7 years of utility bills with our Energy Cashback Treatment. We have recovered over half a million pounds over the last 12 months!


While you are here, please take time to have a look around and see where the team might help you over the coming months.

Why not try a free introductory session (Free Treatment) on any area of support. Sign up and drop a note to and we will be happy to help.

bottom of page