Business Energy Market Update: September 2026

By the end of August, day-ahead prices for power had eased slightly from their mid-month highs, with electricity trading at £130/MWh, down from £146/MWh. On the other hand, gas benefited from a combination of growing supply concerns over winter and geopolitical pressures, finishing at an August high of 167p/therm.

Further out, the market was similarly bullish, with contracts for delivery of power and gas rising steeply right into 2028. The largest increases were, as expected, seen at the front of the curve, with tensions in the Middle East continuing to fluctuate. The worst of the rises were seen in the gas market, where prices were up 15% to 170p/therm for the rest of this year and winter 26/27. Power rose by a more modest 10% over the same period to nearly £140/MWh.

On 26 August, Ofgem released its figures for the latest price cap, which is set to increase by just under 4% from October. This latest increase will take the annual bill to £1,723 for the average household, an increase of roughly £60 a year, or about £5 a month. Most of the increase is driven by increases in wholesale gas, which actually added 8% to the cost. Power was mostly flat, thanks in no small part to the government’s removal of VAT and certain levies from domestic electricity bills.

It is likely we will see another increase in December for January’s prices, as persistent concerns over supply will continue to support gas prices. If we have a cold winter and gas storage is not deemed to be sufficient, we may even see another double-digit percentage increase.

Elsewhere, as Andy Burnham continues to grapple with the pros and cons of the final approval for the Jackdaw and Rosebank fields, Cyprus is steaming ahead with a project to deliver a new source of LNG into Europe! The western Mediterranean island has taken a big step towards becoming a gas exporter, with the Cronos field getting the go-ahead earlier this summer.

Sitting off Cyprus’s southern coast, Cronos holds more than 3 trillion cubic feet of gas, and around four-fifths of it is destined for Europe. The gas will arrive by a fairly circuitous route, with a new 105-kilometre pipeline transporting the gas to Egypt for liquefaction, before being transported to the European mainland by LNG tanker. Expected to be operational by the end of 2028, the project will deliver a much-needed alternative to LNG from the Middle East but will do little for high prices now or, indeed, when it goes live.

If you have any utility-related questions, please get in touch with the team on our usual channels.