Business Energy Market Update: July 2026

Wholesale energy markets were relatively stable during June, despite continued geopolitical uncertainty in the Middle East. For the most part the markets remained bearish throughout. with both day-ahead power and gas losing 8% of their value, finishing the month at £104/MWh and 106p/therm respectively.

Near term losses were greatest as the market reacted to the likelihood of increased energy flows through Hormuz, but even contracts as far out as summer 2028 had shed a few percentage points by the end of the month.

European gas storage has recovered to around 49% full, but remains well behind the seasonal average of 60% for this time of year. Most analysts now expect storage to reach only 75–78% before winter, significantly below the levels seen in recent years, and the EU has extended the deadlines for storage targets to be hit. This leaves UK wholesale gas prices more exposed to cold weather and any further disruption to global LNG supplies over the coming months than would otherwise be the case.

You would have needed to be living under a rock last month not to notice the world cup kick off, and it was a game/month of two halves on the energy pitch too!

Negative wholesale electricity prices returned to the UK in early June as the combination of strong solar generation and healthy wind output left the country with more electricity than it could immediately use. Negative price events are less frequent in UK than in some European markets, but as more renewable capacity comes online, this is beginning to change and tariffs such as Octopus Energy’s 'Agile' will become more widespread.

It is easy to argue that paying end users to consume power is a sign of a broken system and this will no doubt add fuel to the debate over re-nationalising energy, however the reality is a little more nuanced. Negative prices demonstrate both the success of renewable energy and the growing need for more storage solutions for the grid; some of which are already either in the design phase or under construction. In fact in the last month Ofgem has approved 16 such facilities, employing technologies such as pumped hydro, compressed air and flow batteries. Negative pricing also tells us some of the government's recent policy decisions on network infrastructure are right, no matter how painful the cost, and that too is very reassuring.

Later in the month, while the country sweltered under an intense heatwave, the UK's energy system was also feeling the strain. Wholesale electricity prices briefly surged to their highest price this year at £470/MWh, as high temperatures reduced output from a number of gas fired power stations.

Although solar farms benefited from long periods of sunshine, the extreme heat reduced their peak efficiency and this, combined with increased demand for cooling, saw NESO look to continental imports to meet demand - at a time when similar pressures were being felt across western Europe.

In France, elevated river temperatures also forced some nuclear reactors to reduce output, further tightening electricity supplies, and the UK paid a heavy premium to import power as a result.

We hope you have found our update helpful but if you have any further questions please get in touch with the team on our usual channels.