Market Report Sept 2026

The drivers behind the upward momentum remain largely unchanged. The ongoing conflict in the Middle East remains a source of underlying support for natural gas prices, with regional tensions remaining high following the recent Houthi drone attack on the Saudi capital, Riyadh. Despite low nuclear generation across the continent and unplanned North Sea gas outages, favourable weather conditions forecast for the beginning of October have allowed short-term gas and power prices to ease from their recent highs. However, this is likely to be short lived with the forecast for the coming months being further increases, with two key drivers in focus: traffic through the Strait of Hormuz and temperatures.

With European gas storage at a historical low of 68.7% (5% lower than at this point last year) and if Qatari LNG exports remain disrupted, the Bank of America and consultancy ICIS are predicting European gas prices reaching 250.00 p/therm or higher under a colder-than-average scenario in Europe. Temperatures are already moving closer to seasonal averages across Europe, with little cooling demand and no meaningful heating demand yet.

The window for BICS, the British Industrial Competitiveness Scheme, opens from the 1^st of October but just applies specifically to UK manufacturers in qualifying sectors. The scheme exempts eligible businesses from Renewables Obligation, Feed-in Tariff and Capacity Market charges, worth around £40/MWh (4p kWh). The Laundry and Hospitality sectors will again be overlooked, despite many in this sector using more power than their counterparts in the manufacturing industry. To top this off, ALL business not covered by the BICS scheme will be covering the reduction through increases to existing Renewables Obligation, Feed In Tariffs and Capacity Market charges.

With an upcoming budget in October on the horizon, if there is little support during this latest period of instability, there could be exceptionally tough times ahead for businesses not already in a fix term energy position.

IN OTHER NEWS:

UK inflation rose to a five-month high of 3.1% in August – driven largely by higher fuel prices. Meanwhile, the labour market continued to soften, with unemployment at 4.9% and wage growth easing to 3.5%.

Exceptionally low French river flows could curb nuclear generation until at least mid-October –  with little rainfall expected before then. Environmental constraints have already cut output by a record 10.6 TWhs this year (2.8% of 2025 generation), with available capacity currently restricted by around 9%.

Europe’s biggest solar operator goes bust just months after receiving €1bn funding – Enerparc AG, one of Europe’s biggest independent solar park operators has filed for insolvency in Germany.

The Dutch government has lowered its winter gas storage target to 64% – aiming to limit further pressure on wholesale gas prices. The move follows EU guidance allowing member states to reduce their target by 10 percentage points when market conditions justify it.

House of Lords probes risks of low renewable generation – The House of Lords has launched an inquiry into whether Britain is prepared for prolonged periods of low wind and solar generation, known as Dunkelflaute.

Burnham says UK must “believe in itself” to hit net zero. The Prime Minister has reaffirmed his support for the UK’s 2050 target as industry forecasts question whether it can be achieved.

Public support for UK energy transition is weakening – The Energy Security and Net Zero Committee say the government focuses on the term ‘net zero’ too much. Poor communication and concerns over rising costs are weakening public support for the UK’s energy transition, a parliamentary report has warned.