European gas storage levels at their best in the past 5 years

European natural gas storage facilities were at their fullest at the end of February in more than 5 years, according to Energostat data. One reason for the current situation is the decline in natural gas consumption in the EU last year, when gas consumption fell by 7% year on year. In Czechia, consumption fell by as much as 10.4% and was the lowest since 1992. This was further compounded by this year's exceptionally warm February. Lower-than-expected consumption has in turn caused wholesale prices to fall.

Decline in wholesale gas prices

Warm weather across the EU during this winter season has led to lower demand for heating, consequently reducing natural gas consumption. In Czechia, total gas consumption in 2023 stood at 73.7 TWh. By comparison, consumption in 2021 reached around 100.7 TWh.

The reduction in gas consumption and the related very strong storage position continue to push down wholesale prices. Gas prices for April and May have fallen to EUR 25/MWh at TTF, Europe's largest trading hub. Just a few months ago, this price level would have been barely conceivable.

Will alternative suppliers gain a larger share?

The sharp decline in wholesale prices may favour alternative energy suppliers, although their reputation in the public eye has suffered considerably as a result of the collapse of Bohemia Energy.

Large energy traders secure their portfolios up to three years in advance. In other words, current spot market prices have very little impact on their procurement costs. For this reason, they cannot offer their customers, such as households, products priced close to current spot prices.

By contrast, newly established energy suppliers are able to offer products at current prices. The question remains, however, whether, after the experiences of previous years, they will be sufficiently trustworthy in the eyes of the public.