Business Energy Market Update: March 2025

By the end of February 2025 contracts for day ahead delivery were on the way down as the UK enjoyed a taste of spring sunshine and some warmer day time temperatures. On Friday 28th, power was trading at £94 M/Wh down from £112 M/Wh at the start of the month and gas had dropped to 109 p/th down from 134 p/th.

Concerns over gas storage in the near term saw gas prices rise for Spring along with their power counterpart. Despite Centrica’s plans to quadruple the size of the Rough storage facility, having already doubled it since its reopening in October 2022 as a response to the energy crises, the UK still has a vanishingly small storage capacity of just 12 days compared with Germany at 89 days and France at 103.

In stark contrast to the start of the month when a Ukrainian drone strike on Russian infrastructure sent prices soaring, the possibility of peace in Ukraine and the resumption of Russian Gas flows into Europe has seen a slight softening of prices with longer term contracts for later this year and 2026 losing roughly 10% of their value at the start of the month. This fascinating turn of events lays bare the volatility of global energy markets and their effects on prices much closer to home!

Since the start of the year we have begun to see some fluctuations in the market as a result of US president Donald Trump’s style of diplomacy. Whilst concerning, it is unlikely his policies will have any direct effect on UK energy prices. Although concerningly, the nation remains exposed as a significant net importer of energy; should Mr Trump instigate a global trade war and the value of the pound be affected.

The news broke last week that the domestic price cap will increase by over 6% in April, driven mostly by rises in wholesale costs. As a result we urge any of our customers not on commercial tariffs to fix now if they can.

Whilst the rise is no doubt unwelcome news, wholesale prices are expected to drop this summer before rising again in Winter and therefore it may be best to switch to a fixed tariff with no exit fees. Having a little flexibility means that should a better deal become available sometime over the summer, you are best placed to take advantage of it.

I'm pleased to tell you that after the recent public backlash to rapidly rising standing charges, last month Ofgem announced another consultation on the possible introduction of a zero standing charge tariff for domestic users, as ever we will bring you news of the results as we receive it.