UK Energy Market Update - Prices Edge Higher as Winter Risk Premiums Build - 4th August 2025

Electricity and gas prices edge higher as supply constraints build ahead of winter

The UK wholesale energy market experienced moderate price increases last week, with forward contracts for both electricity and gas moving upwards. Underlying market risks, nuclear outages, low wind output, and tightening global LNG competition are starting to influence forward sentiment, even though current supply-demand remains balanced.

Electricity Market: Nuclear Outages and Weak Wind Output Lift Prices

UK forward electricity prices rose by 3.9%, with the 12-month baseload contract now at £81.9/MWh.

Key factors driving the increase:

• Persistent nuclear outages reduced baseload availability, tightening supply margins

• UK wind generation remained low, especially in the latter half of the week, increasing reliance on gas-fired generation

• Cross-border imports helped during peak demand, but limited surplus availability on the continent capped their impact

• Demand remained steady, with slight increases during hotter days

Gas Market: Supply Concerns and LNG Competition Push Prices Up

UK wholesale gas prices followed suit, with the 12-month forward contract rising 2.5% to 87.2p/therm.

Key influences:

• Rising cooling demand in Asia lifted global LNG competition, sparking concerns over diverted cargoes to Europe

• Norwegian gas flows remained ~18% below seasonal averages, sustaining pressure on alternative supply sources

• UK gas-for-power demand stayed firm due to continued mild heat

• European storage injections remained steady, but risk premiums on forward contracts are starting to reflect tighter supply expectations for winter

Bright Edge View: Market Risks Are Building Beneath the Surface

While supply and demand appear balanced today, the market is beginning to price in winter risk premiums. Cooling demand in Asia, constrained Norwegian flows, and Europe’s limited surplus capacity are tightening sentiment across forward contracts.

For UK businesses, this is a pivotal period:

• Prices haven’t spiked—but the trajectory is upwards

• Forward contracts are offering a last window of relative value before winter volatility could accelerate pricing

Our Recommendation

If your business energy contract expires within the next 6–12 months, now is the time to assess your position. The current market still allows for strategic procurement at favourable rates before the risk premiums grow heavier as winter approaches.

At Bright Edge, we monitor the wholesale markets daily to help our clients lock in pricing when the timing is right—not when it’s too late.

Let Bright Edge negotiate your business energy rates & see how much you could save

Contact us today to get started