Headlines:
- Gas and Electricity Wholesale prices are higher than last month.
- No progress seems to have been made in resolving the conflict between the US and Iran.
- EU Gas Storage is just 57% full, which is a concern as we approach the winter demand.
Energy Overview
As of the 3rd of August, Gas and Electricity Year Ahead Wholesale costs were higher than last month. Oil is also higher at $85 from $72.
As of the 4th of August, prices are increasing as there is some doubt that negotiations between the US and Iran are taking place, and the Strait of Hormuz is effectively closed.
Over the last month there has generally been an upward price direction as energy markets assess the lack of progress and the unstable position of any ceasefire arrangements and peace talks, between the US and Iran.
High Wholesale prices reflect the concern for Gas supplies and global competition.
Gas and Electricity Wholesale prices further out are showing much better value, potentially providing an opportunity to dilute costs, with longer-term energy contracts.
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.
Gas Market Overview
On the 3rd of August, the Gas Year Ahead Wholesale cost was 119.89p/th, up from 98.87p/th in last month’s report and 36% higher than 2025.
Today, the 4th of August, is seeing prices move higher. They had recently eased as President Trump claimed there were peace talks, which has since been denied by Iran.
The Strait of Hormuz is effectively closed with attacks reported against shipping by Iran. There have been very few Oil and LNG deliveries from the region, which is adding pressure to global supplies. The damage sustained to some infrastructure will also restrict output.
Little progress has been made in filling the EU’s Gas Storage, which is just 57% full compared to 69% last year. The higher costs and competition from Asia are making it more challenging to divert Gas, for use in winter 2026 / 2027. Additional EU restrictions on Russian LNG from January 2027, mean that Storage levels are having a significant influence on energy costs.
High temperatures across Europe are increasing the need for energy for air conditioning, which includes from Gas generation.
We would encourage any customer with a contract that ends in the next few months, to discuss your renewals with us and we will look to provide additional market intelligence, guidance and support as required.
Electricity Market Overview
On the 3rd of August, the Electricity Year Ahead Wholesale cost was £104.03/MWh, up from £90.59/MWh in last month’s report and 30% higher than 2025.
Today, the 4th of August, is seeing prices move higher. They had recently eased as President Trump claimed there were peace talks, which has since been denied by Iran.
Electricity Wholesale costs are still heavily influenced by events in the Middle East due to the use of Gas for generation and how our markets operate. This means there is still considerable uncertainty regarding the direction of prices.
The high temperatures throughout Europe have increased the need for energy to provide air conditioning and have also had an impact on Electricity generation. A number of countries are experiencing issues with cooling their Nuclear and Coal power plants and in providing Hydro power. This places a greater pressure on Gas supplies for generation.
In July, Wind contributed just 19% of supplies and Gas 23%, down from 28% in June. The Interconnectors with mainland Europe, which allow both Imports and Exports, provided 21%.
We would encourage any customer with a contract that ends in the next few months, to discuss your renewals with us and we will look to provide additional market intelligence, guidance and support as required.
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