UK Energy Market Update – Energy Prices Rise Amid Summer Heatwave - 15th July 2025

Energy markets continued to firm last week, with wholesale prices for both gas and electricity rising across 12-, 24-, and 36-month contracts. Persistent heat across Europe and Asia is driving up cooling demand, tightening supply, and amplifying reliance on fossil generation — all contributing to upward price pressure.

Electricity Market: Rising Demand Meets Limited Supply

UK forward electricity prices climbed modestly, with the 12-month baseload contract reaching just over £80/MWh.

Key factors behind the increase:

• Heatwave conditions across Europe boosted cooling demand in residential and commercial sectors

• UK wind generation dropped significantly in the second half of the week, shifting the burden to gas-fired power stations

• Firm carbon pricing – particularly the widening spread between UK and EU ETS schemes – raised the cost of fossil-fuel generation

• Lower imports and constrained French nuclear supply tightened supply margins across the continent

While solar helped during midday peaks, reduced wind and constrained imports meant evening demand had to be met by higher-cost thermal generation — keeping the power market supported.

Gas Market: Heat-Driven Demand Meets Storage Concerns

Gas prices also firmed, with the 12-month forward contract rising to around 90p/therm. Unlike recent weeks of relative calm, conditions now suggest more sustained bullish momentum.

Key drivers:

• Sustained heatwaves in Europe and Asia lifted gas-for-power demand across the board

• UK reliance on gas-fired generation increased due to weak wind output

• European storage sits ~13% below the 5-year seasonal average, prompting concern over refill progress

• Asian LNG demand surged, lifting spot prices and reducing flexible supply to Europe

• UK secured LNG deliveries for July, easing short-term risk — but forward sentiment remains bullish due to global competition

Bright Edge View: A Subtle Shift Worth Paying Attention To

The market hasn’t spiked dramatically — but the trajectory is turning. What we’re seeing now is sustained upward pressure driven by fundamentals: demand, weather, carbon, and global supply stress.

This is exactly the kind of environment where forward contracts can be secured before larger movements materialise. Locking in at the right time avoids the risk of being priced out later, especially if storage constraints worsen or heat continues to stress generation.

Our Recommendation

If your energy contract expires in the next 6–12 months, now is a smart time to review your position.

Bright Edge can help you:

• Assess current exposure

• Forecast cost implications

• Lock in a fixed deal before prices accelerate further

We’re tracking the curves daily — so you don’t have to.

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

Contact us today to get started