Energy Market Update – August 2025

August brought some relief in wholesale markets as both gas and power prices eased from July’s peaks. Even so, costs remain far higher than historic norms, and sudden price shifts continue to challenge businesses. For SMEs, the mood is cautiously optimistic, but careful planning is still essential.

August in review – why wholesale prices moved

Norwegian supply maintenance
Planned work at several key Norwegian fields limited pipeline flows into the UK and Europe during mid-August, briefly cutting supply by more than 30 million cubic metres per day. Prices responded with sharp upward moves before easing as maintenance wound down.
Liquefied natural gas (LNG) arrivals
Strong imports into UK terminals helped balance the system. Regular cargoes from the US and Qatar provided flexibility, preventing supply tightness from becoming a crisis.
European storage progress
Gas storage sites across Europe ended August above 90 percent full, well ahead of seasonal norms. This offered reassurance for the coming winter and calmed trader sentiment.
Carbon price developments
UK carbon allowance prices edged lower through August, trimming the cost of gas-fired generation. This provided modest downward pressure on wholesale power contracts.
Weather and renewables
Cooler, windier spells increased renewable electricity output and reduced demand for gas-fired power. This helped contain day-ahead prices compared with July’s hotter conditions.

Bottom line: At the end of August, front-month gas settled near 84 pence per therm (down from around 95 pence in July) while wholesale power finished close to £90 per megawatt-hour (MWh), easing from about £105/MWh. Both markets softened, but risks remain.

Headlines your business should note

Sky-high electricity costs hinder net-zero
Industrial energy users continue to face exceptionally high bills. Some are delaying investment in cleaner technologies simply to manage day-to-day costs.
Government reforms offshore wind subsidies
Contracts for Difference (CfD) terms were extended from 15 to 20 years, with higher bid ceilings and a £544 million supply-chain incentive. This is expected to revive offshore wind investment.
National Wealth Fund invests in storage
£200 million of public capital has been allocated to UK battery projects, part of a £500 million clean-energy package. Storage capacity is targeted to rise from today’s 4.5 GW to 27 GW by 2030.
FCA probes Drax reporting
The Financial Conduct Authority has opened an investigation into Drax’s biomass sustainability reporting, underlining the growing scrutiny of corporate environmental claims.

What could move prices in September

What to watch	Why it matters	Possible price effect
Ongoing Norwegian gas repairs	Reduced pipeline flows into UK and Europe	Upward pressure on gas and power
LNG delivery schedules	Delays or diversions tighten supply	Higher volatility
Early autumn weather	Warm, windy conditions cut gas demand; cold, calm weather boosts it	Could move prices both ways
Carbon market activity	Falling carbon costs lower generation costs	Downward influence
UK policy announcements	Net-zero and energy market reforms shape sentiment	Market confidence or concern

What this means for your energy budget

August’s dip shows how quickly markets can swing. Price falls are welcome, but history suggests spikes often come without warning. A sudden cold snap, unplanned outage or geopolitical flare-up can erase recent gains overnight. For SMEs, the safest approach is to review costs now and consider securing a fixed-price deal while wholesale prices are more favourable.

How Dyce Energy turns insight into advantage

Your challenge	How Dyce helps	Benefit to you
Timing the market	Guidance from Dyce specialists	More confident contract decisions
Complex options	Fixed-term, fixed-price contracts (12–36 months)	Budget certainty
Sustainability goals	100% renewable electricity and carbon-neutral gas	Support your net-zero journey
Switching hassle	Fast digital onboarding in as little as 48 hours	Minimal disruption