Market Report October 2025

Large swings in wind generation and temperature have aided market volatility this month and with Norwegian North Sea maintenance nearing completion and mild, windy conditions ahead, short-term prices have weakened sharply. Longer-term contract prices have followed, aided by falling oil markets likely making this the ideal time for any winter/spring contract renewals to be secured before the traditional expected market increases through the Winter as temperatures fall. Prices may bounce or stabilise after this sudden fall, but market expectations for oil and gas point to lower prices through the summer of 2026, supported by higher OPEC+ oil output and the increase of global LNG (Liquified Natural Gas) supply growth as more LNG terminals come online. Potential cuts in Russian exports or a particularly cold winter remain upside risks that could change the current outlook and there is of course, a plethora of geopolitical issues which could cause the market position to change rapidly. While LNG cargoes could still be diverted as winter nears, analysts expect limited competition with Asia this year, amid steady US exports with weather now emerging as the main risk factor to the markets this winter.

Many of you will have received additional, unexpected invoices from your electricity supplier to cover the Network Charging Compensation Scheme. This ‘charge’ is being issued and passed on by the vast majority of suppliers as a one-off annual charge covering the period 01/04/2024 – 31/03/2025 to all businesses to cover the Governments support of discounting the manufacturing industries energy costs. “The NETWORK CHARGING COMPENSATION CHARGE refers to the UK government’s Network Charging Compensation (NCC) Scheme, which provides Energy Intensive Industries (EIIs) with a 60% rebate on their electricity network charges (TNUoS, DUoS, and BSUoS) to enhance their global competitiveness. This scheme, part of the British Industry Supercharger (BIS) package, is funded by an EII Support Levy (ESL) paid by other electricity suppliers, passed through to businesses and, ultimately, by domestic consumers through the energy price cap, and is administered by Elexon”. It is a shame that to date the Government do not recognise the laundry industry as a ‘high energy intensive industry’ and do not offer the same kind of support!

A reminder that there are several upcoming industry charges that will affect all non-domestic customers in the UK which all businesses need to prepare for. These charges are determined by UK energy policy and industry bodies, not by individual suppliers, to pay for the national grid and future power projects. The Nuclear RAB Levy  is coming into effect on the 1st November 2025 – The Nuclear RAB Levy has been set up to finance new nuclear power projects (which were not fully costed/funded as proposed by the Government), including Sizewell C, which will, in the long run (allegedly), reduce the overall cost of nuclear power to UK customers and give the UK a stable, low-carbon option. This will affect all UK non-domestic (import) customers, regardless of your supplier. The quarter 4, 2025 Nuclear RAB rate is much higher than industry reports forecasted. Early estimates were around £0.30/MWh (0.03p kWh), which would mean a few pounds per household per year. However, because the scheme’s start date was brought forward, and because of the financing of the project itself, the rate for November-December 2025 has been set at £3.455/MWh (0.3455p kWh) – this is now fixed for all suppliers! TNUoS (Transmission Network Use of System) charges are also increasing from 1 April 2026 – TNUoS charges fund all upgrades to the transmission network so electricity can move efficiently around the UK. Ofgem have announced that TNUoS charges are set to significantly increase next year. The exact value and full impact of the increased TNUoS charges are not yet known, but it is important to heed the advanced notice to help your business plan for these additional costs and we are already seeing incredible increases on daily standing charges, especially on half-hourly and larger demand electricity meters for contracts beginning from spring 2026.

IN OTHER NEWS:

European gas storage has increased by nearly 2% over the past two weeks – now just below 83%. With North Sea maintenance nearing completion and mild, unsettled weather ahead, injections are expected to accelerate this week, keeping storage on track to reach target levels before winter sets in.

Russia plans to boost LNG exports to China – from its Arctic LNG 2 and Sakhalin 2 projects, with Energy Minister Sergei Tsivilev citing “serious joint progress” despite Western sanctions. Arctic LNG 2, majority-owned by Novatek, has already been delivering cargoes to Russian storage sites and China’s Beihai terminal since last year.

OPEC+ is considering raising output by up to 500,000 barrels per day over the next three months, despite softer US and Asian demand, driven by Saudi Arabia’s push to reclaim market share.

Solar now the world’s cheapest power source – Solar energy has become the world’s cheapest source of power, costing as little as 2p per unit in the sunniest countries, according to new research from the University of Surrey.

Renewables overtake coal as world’s major energy source – analysis shows low-carbon power sources – led by solar and wind – now generate more than 40% of global electricity, edging out coal after decades of dominance.

Data centres could wipe out carbon saved by EVs – A surge in data centre construction could wipe out the carbon savings from the country’s switch to electric cars next year, according to new research. Analysis by tech justice group Foxglove and environmental charity Global Action Plan, reported in The Observer, warns that just 10 of the 100-plus planned data centres could pump out almost 2.75 million tonnes of CO₂ a year — nearly the same as the 2.9 million tonnes saved in 2025 from people ditching petrol and diesel cars.