What are the latest forecasts for commercial electricity and gas prices in the UK business sector over the next 3-6 months, and what are the main drivers of change?

As winter approaches we are often asked what is likely to happen when it comes to energy costs. Unfortunately we don’t have a crystal ball but there are some indicators we look at to estimate how the market may change.

The main drivers for pricing changes are weather, amount of energy generated from renewable sources and as we’ve seen over the last few years, geopolitical conflicts.

Weather
Meteorologists predict that Europe could be heading for a mild winter expecting above-normal temperatures with brief December cold snaps, as a weak La Niña brings warmth to eastern Europe and near-average conditions in the west, easing heating demand.

However, forecasters also warn of prolonged calm and foggy periods, which could dampen wind and solar output and heighten reliance on conventional generation. Day-ahead power prices in Northwestern Europe have surged to €500/MWh, driven by unseasonably low wind forecasts and tighter hydro balances heading into winter.

Impact of climate change on Nuclear operations
A significant safety incident at EDF’s Chinon nuclear power plant in western France has reignited concerns over the impact of climate change on nuclear operations. France’s nuclear safety authority (ASNR) said a “massive influx of green algae” blocked one of the plant’s key cooling channels in late August and early September, forcing EDF to activate emergency procedures. The algae, linked to extreme summer heat and low Loire River flows, disrupted reactor cooling systems and required divers and barriers to restore water intake. This follows the shutdown of two nuclear reactors in the EU (France and Switzerland) in early July due to soaring temperatures highlighting vulnerabilities in nuclear power systems reliant on river water for cooling.

These events comes at a time when France’s nuclear fleet, the backbone of Europe’s atomic energy, continues to operate below full capacity due to lingering maintenance challenges stemming from past cost-cutting measures. Meanwhile, across the Atlantic, the United States is witnessing a dramatic transformation of its electric grid under the Trump administration, which is prioritising reliability with increased use of fossil fuels. and nuclear expansion in the face of growing demands from AI and data centres.

Ongoing conflicts
After the announcement of the cease-fire between Israel and Iran in June 2025, global oil prices dropped noticeably. For example, Brent crude fell about 6 % as markets judged that the risk of a broader Middle East supply disruption had receded. When a cease-fire plan between Israel and Hamas was agreed in October 2025, oil prices dipped slightly because the so-called “risk premium” fell. For example, Brent futures dropped by about 0.5 % following the news.

There is an argument that the “traditional correlation” between Middle East conflict risk and oil-price spikes has weakened. The market now monitors specific infrastructure threats (e.g. ports and chokepoints) rather than general war-risk. This was reflected when natural gas markets saw easing prices in Europe because one of the major geopolitical risk channels, shipping disruption through key waterways, looked less likely.

The energy sector is more sensitive to the ongoing Russia/Ukraine conflict however and there was renewed geopolitical uncertainty when the Putin–Trump summit was put on hold as Moscow rejects ceasefire. While both sides insist discussions remain “under preparation,” the diplomatic pause highlights the fragile state of Western–Russian relations and the uncertainty surrounding any potential ceasefire or settlement.

LNG prices
Chinese data shows that gas imports for Sept-25 fell 7.9% year-on-year, owing to strong domestic production and weakening demand amid tariff turmoil, improving global LNG supply dynamics as EU reliance grows.

Additional LNG from the US Plaquemines facility is strengthening Ukraine’s winter energy security amid depleted stocks and rising import dependence following Russian strikes on energy infrastructure.

Gas supply and demand
National Gas expects demand to be 3% lower than last year, driven by reduced demand from the power sector and has recently traded at 83.38 p/therm which is 21% lower than a year ago. On cold, low-renewable days, gas-fired generation will still remain crucial to fill gaps. UK gas storage is 26% lower than year-on-year levels and reduced domestic output means greater reliance on imported gas and LNG. Overall the system should cope but winter gas will remain vulnerable to supply shocks e.g. extreme cold weather or import disruption.

In Summary
There’s a modest downward pressure on wholesale fuel prices (oil/gas) which could help reduce input energy costs for UK businesses. However, any cost benefit may be slow to flow through: UK business energy contracts are often fixed or include other cost components (networks, levies, fixed charges), so the effect on your actual tariff might be limited or delayed.

The key message for a UK business is that there is a slightly more favourable backdrop for energy costs, but not a guarantee of significant price drops. You still need to monitor wholesale indices, contract renewal timing, and other cost drivers.
Please be aware that this is information is to be used as a guide only. Energy prices fluctuate according to a wide-range of environmental factors, many of which cannot be predicted. This is an estimation made based on knowledge available to us at this time.

What can you do to minimise energy costs? Here’s our top tips;

1. Hedge exposure where possible; Lock in fixed or forward contracts now if favourable.
2. Use demand flexibly: Reduce consumption in high-demand cold periods and off-peak hours
3. Energy purchasing should be seen as a continual process enabling you to secure contracts at optimal times so don’t wait until near your contract renewal date to review the markets. At the same time, your contract terms should be customised to meet your business’s needs, rather than focusing solely on prices.
4. Implement an energy management process that identifies areas of waste and improves efficiency, introducing better controls to reduce the heating load.
5. Monitor markets and policy changes as these may evolve over winter.
6. Have contingency plans for peak demand days, especially in early winter and mid-January.
7. Check your bills carefully. It’s estimated that one in five energy bills contains errors, and each one can add significantly to overall costs. If you have many meter points or find utility bills complex to read then find a partner who can provide a bill checking service for you.
8. Consider the feasibility of implementing onsite renewables. Solar and wind on-site renewable energy sources are the most effective solution if a business has the capacity and set-up. Not only does it demonstrate a clear commitment to sustainability, but it can significantly reduce energy overheads.

If you need help with managing your business energy requirements why not get in touch with My Energy Consultants by emailing us at info@myenergyconsultants.co.uk