UK Energy Market Update - Electricity Holds Firm, Gas Eases - 22nd July 2025

Hot weather keeps pressure on power prices as gas markets catch a breath.

Energy markets continued to feel the effects of sustained summer heat last week — with UK electricity prices holding firm and gas prices dipping slightly. Weather remains the dominant force, but the balance between supply, demand, and storage is shifting week by week.

Electricity Market: Heat and Low Wind Sustain Upward Pressure

UK forward electricity prices edged higher once again, with the 12-month baseload contract sitting around £81/MWh. This is being driven by a combination of persistent demand and constrained supply.

Key drivers include:

• Ongoing European heatwaves, lifting demand for cooling in both residential and commercial sectors

• Falling UK wind output, particularly later in the week, increasing reliance on gas-fired thermal capacity

• Firm carbon pricing, with the UK-EU spread continuing to widen and raise generation costs

• Reduced electricity imports and constrained French nuclear capacity tightening European supply margins

Even as solar output helped during midday peaks, the late afternoon and evening reliance on more expensive generation methods pushed prices higher — reinforcing the upward pressure on forward contracts.

Gas Market: Calmer Conditions Emerge

In contrast, UK gas prices saw a slight softening. The 12-month forward contract dipped to around 92p/therm, reflecting improved supply conditions and easing global LNG tension.

Contributing factors:

• Improved wind and solar output helped reduce domestic gas-for-power demand

• European storage levels climbed closer to seasonal norms, now within 10% of the 5-year average

• Asian LNG demand stabilised, with spot prices plateauing after weeks of gains

• The UK secured additional LNG cargoes for late July, further supporting short-term availability

• Industrial demand remained lower, easing pressure on the system

While demand remains elevated due to the ongoing heat, improved storage injections and a more stable LNG landscape gave the gas market a temporary breather.

Bright Edge View: Holding Steady Doesn’t Mean Standing Still

This week’s market behaviour signals a divergence in gas and electricity trends — power prices continue to build on structural pressure, while gas is momentarily settling.

But as we’ve seen in recent weeks, these dynamics can change quickly.

If your energy contract is up for renewal within the next 6–12 months, now is the time to:

• Evaluate current forward rates

• Understand where you’re exposed

• Lock in pricing while conditions are still predictable

Our Recommendation

At Bright Edge, we help businesses use quiet windows like this to secure certainty. Electricity markets remain under pressure. Gas has dipped — but we don't expect the calm to last if storage progress slows or heatwaves persist.

Let’s talk about how we can protect your budget and optimise your next contract.

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

Contact us today to get started