UK Energy Market Update - Prices Ease on Record Wind and Strong Gas Supply - 2nd September 2025

Record wind output eases power prices as gas steadies on strong supply

UK wholesale gas and electricity markets remained relatively stable last week, with early supply concerns offset by robust renewable generation and steady global flows. While planned Norwegian maintenance and geopolitical tensions initially lifted sentiment, abundant LNG arrivals, strong storage levels, and record wind output left both gas and power markets softer by week’s end.

Electricity Market: Renewables Drive Prices Lower

The UK’s 12-month forward baseload electricity contract ended slightly down, after an early rally gave way to record renewable output.

Key factors:

• Record wind generation, peaking near 18 GW, alongside strong solar, displaced gas-fired generation and pushed spot prices into the £50s/MWh range

• Improving nuclear availability, with outages at Hartlepool and other sites winding down, reduced pressure on forward contracts

• Carbon and coal costs edged higher, but their impact was minor compared to the dominance of renewables

• Seasonal demand remained steady, with no extreme weather shocks

Gas Market: Supply Stability Offsets Geopolitical Premiums

Gas forward prices were range-bound, rallying early in the week before easing as supply fundamentals took hold.

Key drivers:

• Norwegian maintenance and geopolitical risks (notably attacks on Ukrainian/Russian infrastructure) added early risk premiums

• Ample LNG arrivals and strong North Sea flows kept the system balanced

• European storage levels at ~76% full provided a robust buffer, limiting volatility

• High wind output and mild weather reduced gas-for-power demand as the week progressed

By Friday, gas futures were flat to modestly lower, with the forward curve showing stability across contracts.

Bright Edge View: Balanced Conditions, But Risks Persist

For now, strong renewable generation and high storage inventories are providing a welcome cushion for both gas and power markets. But with winter demand forecasts approaching, the market remains sensitive to potential supply shocks and shifts in weather.

For businesses approaching renewal, this is a good time to consider forward contracts while conditions remain steady. Risk premiums are modest — but could rise quickly as the market pivots to winter fundamentals.

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