Business Energy Brief Update – Key Points:
- Gas and Electricity Wholesale prices are higher than last month.
- Low EU Gas Storage is adding pressure to prices.
- Global competition for LNG supplies.
Why Are Energy Prices Rising Again?
Wholesale Gas and Electricity prices have increased since last month’s energy brief, driven by ongoing supply concerns and geopolitical tensions in the Middle East. As of 2nd of November, Oil prices had risen to $107 per barrel, up from $102 last month.
While diplomatic efforts continue, markets remain concerned about the risk of further military escalation in the Middle East and the impact this could have on global energy supplies. Energy markets are reflecting the likelihood that energy supplies will remain restricted through the winter and competition for LNG will inflate costs.
This includes the continued conflict between Russia and Ukraine, where attacks on each other’s infrastructure are impacting on Gas and Oil based fuels. The US is keen to relax stressed relationships between the US, Europe and Russia to reduce fuel costs and potentially help end hostilities.
What’s Driving Market Volatility?
The biggest factor remains competition for Liquefied Natural Gas (LNG).
With European Gas storage levels lower than in previous years and competition for LNG, notably between Europe and Asia, buyers around the world are competing for available supplies. This increased demand is pushing wholesale prices higher. Qatar, one of the largest producers of LNG have been cancelling contracted deliveries, as a result of the restrictions through the Strait of Hormuz.
Is There Any Good News for Businesses?
Despite current market pressures, the more positive longer-term view does mean that there is much better value for contracts starting in 2027 and 2028. This provides an opportunity to dilute 2026 start costs, by contracting for longer.
Businesses approaching a renewal may be able to reduce short-term costs by exploring longer contract options and taking advantage of more favourable forward market pricing, smearing the additional cost over a longer period and having an element of budget control.
Although there is value in Wholesale costs further out, as we approach those periods, the current market sentiment will begin to move them higher or lower.
Other Industry Costs
April 2026 saw a large increase in Electricity Transmission costs with an expectation of further annual increases. Distribution costs are a little more complicated, made up of Time of Use, Available Capacity and Fixed charges. Some of these charges are now based on a meter’s Band, which is related to a Half Hourly meter’s kVA Capacity. This means that by managing demand and reviewing the Capacity, there is an opportunity to reduce costs. Indigo Swan can provide you with guidance through this process.
The cost to Balance the network is increasing as is the Energy Intensive Industries (EII) charge, which provides relief from various industry costs for EII customers. This moved from 60% to 90% for the Network costs from April 2026.
Energy suppliers offer different products which fix in or pass through some of the non-energy costs. At Indigo Swan we will discuss the specifics of each contract and help you make the decision that best suits you.
Gas Market Overview
How Much Have Gas Prices Increased?
The Gas Year-Ahead Wholesale cost reached 190.31p/th on 2nd November, up from 155.42p/th last month and 136% higher than 2025 levels.
Why Is Gas Storage Being Closely Watched?
European Gas storage is currently 75% full, compared with 83% in 2025 and 95% in 2024. Storage has already begun being used to meet winter demand, adding to concerns about supply resilience through the colder months. Although it is extremely unlikely that countries will run out of Gas and have to force restrictions on consumers, such concerns do mean that markets watch and react to levels.
What Risks Could Push Prices Higher?
Several factors remain in focus:
- Ongoing restrictions on Middle East Gas exports
- Shipping disruption risks
- Houthi attacks on Saudi Arabian infrastructure
- Damage already sustained by the likes of Qatar
- Continued uncertainty around the geopolitical situation
Any further escalation could place additional pressure on Gas prices. There is also the added pressure of unknown events which could quickly move prices in either direction.
What Should Businesses Do Now?
If your energy contract is due to end within the next few months, now is the time to review your options.
Forward markets remain volatile, and securing a strategy early may provide greater flexibility and budget certainty.
Get in touch with us, and we can have a conversation, share our knowledge, experience and additional market intelligence.
Electricity Market Overview
How Has the Electricity Market Changed?
The Electricity Year-Ahead Wholesale cost reached £147.91/MWh on 2nd November, up from £125.65/MWh last month and 88% higher than 2025 levels.
Why Are Electricity Prices Following Gas Markets?
Gas remains a major source of electricity generation, contributing 24% of power generation during October.
Because Gas-fired generation often sets the wholesale market price, higher Gas costs continue to drive Electricity prices upward.
This is a major issue which the industry is struggling to resolve. For example, Renewable generation with much lower running costs being paid Gas Wholesale prices. One solution will be to motivate / pressure them to accept a government contract that fixes at a lower price for a guaranteed period.
Where Is Our Generation Coming From?
During October:
- Wind generated 31% of UK electricity
- Gas 24%
- Imports from Europe accounted for 12% of supply
- Solar in the region of 5%
- Nuclear 14%
- The UK was also a net exporter on several days
These figures highlight the growing role of renewable generation while also showing the continued importance of international energy flows.
Get in touch
For businesses planning budgets and renewals, staying informed and acting early could help manage both risk and costs in a challenging market. We can help you forecast future energy contract values in a monthly report, and work together on your energy strategy.
If you’d like support reviewing your current energy contracts, let’s have a conversation.
Useful Links
Winter Watch | National Energy System Operator
The National Energy System Operator (NESO) published its Winter Outlook which reports on Britain’s Electricity supplies for winter 2026/27.
Gas Winter Outlook | National Gas
National Gas have also published their Winter Report for 2026/27.
