The UK business energy market in 2025? Steadier than the chaos of 2022, but nobody’s celebrating just yet. Wholesale prices dropped significantly from January’s peaks, yet they’re still stubbornly above what we’d call normal. Geopolitical tensions, unpredictable weather, and mounting infrastructure costs kept businesses on their toes all year.
2025 in review – why wholesale prices moved
January started cold, then mild weather took over. A freezing January pushed gas to 120 pence per therm and power above £100 per megawatt hour. By mid-December, mild temperatures and record wind generation pulled gas down to 65 pence per therm. Then a late-year cold snap nudged it back towards 75 pence per therm. Classic UK winter.
LNG kept flowing mostly. Liquefied natural gas arrivals into Europe stayed robust throughout 2025. UK terminals received consistent shipments, which helped. But brief disruptions from geopolitical incidents (including attacks on Russian infrastructure) caused short-lived price spikes that reminded everyone how fragile supply chains remain.
Storage levels looked healthy. European gas storage finished the year well above the critical lows we saw in 2022. UK storage capacity, though smaller than our continental neighbours, held steady. That took some of the panic premium out of winter pricing.
Carbon costs edged up. UK Emissions Trading Scheme allowances averaged around £55 per tonne through most of the year, up slightly from 2024. These carbon costs add roughly £8 to £12 per megawatt hour to electricity prices, depending on what’s actually generating power at any given moment.
Grid problems cost real money. Wind curtailment, where we literally pay wind farms to switch off when the grid can’t handle their output, cost over £1 billion in 2025. That’s not a typo. Transmission Network Use of System charges are forecast to rise by up to 90 percent in some regions from April 2026 because the grid desperately needs investment.
Bottom line: Gas fell roughly 35 percent from January’s peak of around 120 pence per therm to December lows of 65 pence per therm, finishing the year near 74 pence per therm. Electricity tracked gas closely, ending around £76 to £80 per megawatt hour. Still about 70 percent higher than pre-2021 levels.
Review of the year
- The government launched Contracts for Difference Allocation Round 7. August 2025 saw the largest renewable auction yet open for bidding. Strike prices were raised to £113 per megawatt hour for fixed offshore wind, and contracts extended to 20 years (up from 15 years previously). This came after the disastrous 2023 round that attracted zero offshore wind bids. Up to £53 billion in private investment is expected.
- British Industrial Competitiveness Scheme announced. Mid-2025 brought plans to exempt around 7,000 energy-intensive manufacturers from certain policy charges, including the Renewables Obligation and Capacity Market levies. For eligible businesses, this could cut electricity costs by up to 25 percent from 2027. Eligibility depends on electricity intensity and economic importance.
- Ofgem introduced the Supplier of Last Resort Levy Offset. In August 2025, Ofgem confirmed that failed energy suppliers will now be liable for the costs of transferring their customers to new firms. This shields consumers from picking up the tab when suppliers go bust, recovering costs through the insolvency process where assets are available.
- Two domestic suppliers failed. Rebel Energy (90,000 customers) collapsed in April 2025, citing wholesale price pressure and consumer financial strain. Tomato Energy (15,000 customers) followed in November, with British Gas appointed as Supplier of Last Resort. These were the first domestic failures since early 2022, a reminder that market stability is relative.
What could move prices in 2026
What to watch | Why it matters | Possible price effect |
Ukraine-Russia peace talks | If Russian gas returns to European markets, supply tightness eases. If the conflict drags on or escalates, expect disruptions to flows and LNG routes. | Peace talks could bring significant downward pressure. Escalation means upward spikes. |
Nuclear RAB charges start | This new standing charge (started November 2025) funds Sizewell C nuclear plant construction. You can’t negotiate your way out of it, it appears on every business bill. | Standing charges go up by roughly £2–£5 per meter per month, depending on your consumption profile. |
TNUoS increases kick in | Transmission Network Use of System charges rise by up to 90 percent in some regions from April 2026 to fund grid upgrades. Regional variation means some businesses get hit harder than others. | Expect standing charges to climb. Could add £50–£200 per year for a typical SME, but location matters. |
Weather extremes | Long cold snaps increase heating demand and gas-fired power generation. When the wind stops blowing, we rely on expensive gas plants. | Sharp short-term spikes during cold, calm weather. Gas can move 20–30 pence per therm within days. |
LNG supply disruptions | Middle East tensions, US export decisions, maintenance shutdowns, any of these can tighten UK and European supply. The Strait of Hormuz remains a key choke point. | Individual events can add 10–20 pence per therm to near-term gas contracts. |
Looking ahead to 2026
Get ready for higher regulatory charges. The Nuclear RAB levy started appearing on bills in late 2025, and TNUoS charges jump sharply from April 2026. Both are pass-through costs that affect all suppliers. Fixing a rate before April could protect your budget from the biggest impact.
Ofgem will start regulating energy brokers. From 2026, brokers must meet new transparency standards, so say goodbye to hidden commissions.
Grid connection queue gets reformed. Ofgem’s “First Ready, First Connected” approach will prioritise 283 gigawatts of projects for connection by 2035, with 132 gigawatts expected before 2030. The catch? Around 153 gigawatts of battery storage projects have been pushed beyond 2035. These delays might slow the transition to cheaper, cleaner power.
Renewables Obligation levy cuts but only for households. From April 2026, the chancellor will fund 75 percent of the Renewables Obligation from general taxation, cutting household bills by roughly £90 per year. The Energy Company Obligation scheme also gets scrapped, saving households another £43 annually. Business customers don’t benefit from these reductions.
Political uncertainty continues. The Review of Electricity Market Arrangements should conclude around mid-2026, potentially introducing zonal pricing or other wholesale market reforms. How these changes affect business procurement strategies? Still unclear.
What this means for your energy budget
Price swings in 2025 proved that wholesale markets can move 30 percent or more within weeks. A mild, windy fortnight in February sent prices tumbling. A cold, calm spell in late November pushed them back up. For businesses on variable rates or approaching contract renewal, these swings translate directly into budget chaos.
Fixing a competitive rate now before the April 2026 TNUoS increases and while wholesale prices remain below January peaks gives you budget certainty. A 12 to 36-month fixed contract means your rate stays locked regardless of what happens with Ukraine, LNG arrivals, or unexpected infrastructure costs. Simple as that.
How Dyce Energy turns insight into advantage
Your challenge | How Dyce helps | Benefit to you |
Timing your contract renewal to avoid price peaks | We track wholesale markets daily and tell you when conditions favour fixing. We don’t wait until you’re out of contract, we reach out proactively when market windows open. | Lock in competitive rates before major regulatory cost increases (Nuclear RAB, TNUoS) take effect in 2026. Avoid the 30–50 percent premium most businesses pay on out-of-contract rates. |
Understanding complex charges like Nuclear RAB | We explain exactly which charges you can control (by fixing your wholesale rate) and which are pass-through costs you can’t avoid. No jargon. No confusion. | You know which costs to worry about and which are beyond anyone’s control. That clarity helps you plan. |
Switching suppliers quickly without hassle | Our digital platform completes most switches within 48 hours. You get a dedicated UK-based account manager who handles the paperwork and keeps you updated at every step. | Minimal admin burden. Seamless transition. Real people in the UK to call when you need support, not overseas call centres with scripted responses. |
Meeting sustainability goals while managing costs | We offer 100 percent renewable electricity backed by Renewable Energy Guarantees of Origin certificates, plus carbon-neutral gas offset by verified carbon reduction projects. Available on 12 to 36-month fixed contracts. | Instant Scope 2 emissions reductions for your reporting. Show customers and stakeholders your commitment to net zero without compromising budget control or service quality. |
Your action plan for 2026
- Check your contract end date now. If you’re renewing between January and March 2026, fixing before the April TNUoS increases could save you hundreds of pounds annually. Visit dyce-energy.co.uk/quote to get started.
- Tell us your target price. Wholesale markets move constantly. If you have a specific rate in mind, share it with your Dyce account manager. We’ll monitor the market and alert you the moment your target becomes achievable.
- Explore renewable electricity and carbon-neutral gas. If sustainability matters to your business, ask about our green tariffs. They’re easier to implement than you might think, and they deliver immediate, verifiable emissions reductions.
- Request a no-obligation comparison. Even if your contract isn’t ending soon, it’s worth knowing where the market sits. We’ll compare your current rate against today’s wholesale prices and show you what’s possible when your renewal window opens.
The energy market in 2026 will likely mirror 2025, calmer than the crisis years but far from stable. Regulatory costs are rising, geopolitical risks remain, and infrastructure investment will keep pushing up standing charges. The businesses that manage this uncertainty best will be those that fix competitive rates before the next shock arrives.
Get your free quote today: visit dyce-energy.co.uk/quote to speak with our UK-based team.
