23 March 2023

End of Winter Season: Gas and Power Prices Drop Further

“We have seen European gas markets post their most significant weekly drop this year as milder weather reduced

Charles Ward

Charlie Ward, Head of Renewables at New Stream

demand further and supply concerns eased.

Unfortunately, the market fundamentals that we have been flagging for some time now create weaker pricing on the PPA side of things for generators.

Fortunately, the vast majority fixed well before this last leg down. As a result, we are now focusing on downside price risk protection and PPA hedging strategy for our clients further out along the price curve.

PPA Manager

Jamie Banks
PPA Manager at New Stream

“It looks like we have made it through winter,

It will surprise some, but we managed to navigate last year’s Russian supply shock.
Then we had a warm spell at the start of this year that reduced demand, keeping gas storage in Europe fuller than usual. Nevertheless, LNG cargo movements and supply are still strong despite lower TTF and NBP gas pricing.
We continue to monitor developments at the Freeport export terminal in Texas. Until last week downward price momentum had slowed, but that was a big move down at the front end, which has moved pricing down further along the curve.

We still see some tremendous relative value for PPA fixes out into 2025 and 2026; it has been a challenge getting pricing, given volatility.

2024 – 2027 Forward PPA Fixing Strategy

Fran Reay
Market Analyst at New Stream

“In March, we have continued to see our generator clients and green gas producers move to fix out further out into the future.

People like the PPA pricing levels based on a historical basis, and gone are the days of simply renewing a PPA in a six-month window before expiry.

Last year’s price volatility changed the approach to PPAs from generators and asset managers.

The front-end fundamentals look weak, and then we look forward to sizeable off-shore wind build through 2027, and we can start to see some good value in fixing forward now.

More European Renewable Capacity Coming…..

  • The EU’s climate and energy security goals require it to build over 30GW of new wind farms annually by 2030.
  • EDPR to invest 20 billion Euro by 2026 in renewable generation capacity.
  • RWE will complete and commission over 30 new wind facilities this year.
  • SSE’s Dogger Bank will be the largest offshore wind farm in the world at 3.6 GW.
  • Equinor and SSE are to file a planning report for a potential 1.4GW fourth phase of the Dogger Bank.

Short-Term Supply and Demand Outlook

  • LNG imports continue at all-time highs replacing the Russian pipeline supply.
  • Gas pricing is significantly down.
  • PPA and Green Gas pricing are lower on the back of this.
  • Norwegian pipeline flow continues to be strong.
  • Europe’s gas storage levels at the end of winter are high.
  • There are still risks from unexpected bouts of freezing weather or supply disruptions, but these risks are reducing.
  • For now, the market is pricing in a much better outlook for power and gas market fundamentals.
Winter 2023 PPA Price Risk
  • The demand outlook remains weak on the industrial and commercial side.
  • End of winter “heating season”.
  • Mild to normal conditions are forecast to persist into Q2.
  • Prices have dropped to 2021 levels as mild conditions reduce demand.
  • Ahead of winter, French nuclear plant outages could create some upside price risk if summer is warm.
  • Monitoring LNG cargoes as we move through the summer months and “storage injection season” will be necessary
LNG Market Update

Fran Reay
Market Analyst at New Stream


“LNG supply will be essential for PPA and green gas pricing as we move through storage injection season and look ahead to winter 2023.




  • Italy commissions floating LNG facility “The Golar Tundra”.
  • Italy imported around 40% of its gas from Russia before the invasion of Ukraine.
  • The terminal is one of two planned and will allow Italy to replace pipeline gas flows from Russia.
  • This follows Germany’s opening of its first-ever LNG terminal in January.
  • The first shipment of liquefied natural gas was delivered from the U.S. to a floating terminal off the port of Wilhelmshaven.
  • Two other LNG terminals are set to open in Germany next year.
  • The Freeport LNG terminal in Texas has received regulatory approval to restart commercial operations partially.
  • This should mean more cargo available for European markets.
  • The UK and Spain have the most significant import capacities for LNG in Europe.
  • As NBP and TTF gas prices move lower, some risks build around continued LNG supply should European pricing move below Asian buying levels.