UK Energy Market Update – Gas and Electricity Prices Drop, But Risks Remain – 4th June 2025

This week’s calm energy market masks a fragile balance — and for UK businesses, that presents both opportunity and risk.

While gas and electricity prices eased over the past few days, the broader outlook remains sensitive to demand swings, geopolitical risks, and supply fluctuations. Here's what business leaders should know.

Gas Market Update

Day-ahead gas prices dropped 8% week-on-week to around 79p/therm, down from 85.8p. This fall was driven by:

• Mild weather lowering heating needs

• Norwegian gas flows resuming after maintenance

• Stable geopolitical conditions, allowing prices to trade in a tight band

Despite this softness, it's worth noting that European storage remains below seasonal norms. So while prices are calm now, the market isn’t immune to sharp changes if supply tightens.

Power Market Movement

Electricity prices saw a steep correction, with day-ahead rates dropping to £59.85/MWh — the lowest since early 2023. This 32% fall was shaped by:

• Record wind generation

• Lower demand over the bank holiday

• No grid outages or supply constraints

Forward contracts (e.g. Winter 2025) are still trading higher, signalling market expectations that supply will tighten and demand rebound later in the year.

UK Outlook: Renewables Shine, But Winter Looms

The UK’s strong renewable performance — especially from wind — continues to suppress short-term prices. However, grid inflexibility and sharp demand drops (as seen during recent holidays) underline the fragility of supply-demand dynamics.

Meanwhile, Labour’s continued push for clean energy suggests more renewables and infrastructure investment, but the benefits may take time to materialise.

Global Picture: A Temporary Respite

There were no major geopolitical shocks this week, giving traders a breather. Even so, tensions in Ukraine, the Middle East, and U.S. policy manoeuvres mean the market remains vulnerable to sudden change.

What This Means for Businesses

This week’s low prices could be a short-lived opportunity. If your business energy contract ends within the next 12 months, it may be smart to secure a forward contract now — especially with winter pricing risks on the horizon.

At Bright Edge, we track wholesale energy shifts daily to help businesses make better decisions. If you're unsure about your renewal date or want to understand your options, our expert team is here to help.

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