UK Energy Market Report — 22 May 2026

What we’re watching today

• Carbon intensity at 108 gCO2/kWh — moderate, with wind dominating generation.
• Ofgem’s consultation on network charging reforms may impact embedded generation economics.
• ESO’s capacity market update signals tighter short-term supply visibility.

Headlines and what they mean

Ofgem launches consultation on reforming network charging structures

Ofgem has launched a consultation on revising the way network charges are calculated, aiming to better reflect the actual cost of using the grid and encourage more efficient energy use source. The proposed changes could shift costs away from high-demand users during peak periods and more fairly distribute infrastructure burden. For commercial energy buyers, this may mean more predictable pricing if the reform leads to clearer cost signals, but could also increase exposure to time-of-use charges if embedded generation or demand response is not optimised. The consultation runs until 18 July 2026.

ESO publishes updated capacity market results for 2027/28

The Electricity System Operator (ESO) has released updated results for the 2027/28 capacity market, confirming that 98% of required capacity has been secured through contracts source. The results show strong participation from wind and battery storage, with gas-fired plants accounting for just 18% of awarded capacity—down from 31% in the previous auction. This shift reflects growing confidence in renewable and storage assets. For businesses with long-term contracts, this reinforces the viability of renewable-backed procurement and the declining role of gas in future supply security.

Ofwat issues final rules on water company climate resilience reporting

Ofwat has published final rules requiring water companies to report annually on climate resilience, including adaptation plans and emissions performance source. While not directly energy-specific, this sets a precedent for sector-wide sustainability transparency. Energy buyers may see increased scrutiny on supply chain emissions, particularly for utilities and infrastructure-heavy operations. The reporting framework, effective from 2027, could influence procurement decisions and supplier selection in the future.

DESNZ confirms new interconnector capacity to Belgium

The Department for Energy Security and Net Zero (DESNZ) has confirmed the activation of the new 1.2 GW interconnector between the UK and Belgium, now operational and available for trading source. This increases UK import capacity by 15% and enhances grid flexibility, particularly during periods of low wind. The interconnector is expected to reduce reliance on domestic gas during peak demand, supporting lower carbon intensity when wind output dips. For energy buyers with flexible load, this improves the reliability of low-carbon import options.

The view from the trade desk

Today’s grid mix shows wind contributing 41.4%, with no coal generation and gas at 22.3%. The carbon intensity forecast of 108 gCO2/kWh reflects a clean, low-emission system. This is a favourable backdrop for businesses with load flexibility or renewable procurement. The current generation profile suggests that demand-side response and procurement strategies aligned with wind availability are likely to deliver both cost and carbon savings. The interconnector with Belgium adds further resilience, particularly as wind output may fluctuate later in the week.

What to do this week

• Review your network charge exposure in light of Ofgem’s consultation and assess whether demand shaping or load shifting could reduce future costs.
• Evaluate your capacity market exposure for 2027/28, especially if you are a large user with embedded generation or storage assets.
• Use the current low carbon intensity window to align high-load operations with wind generation peaks, maximising carbon savings.
• Engage with suppliers to understand how the new UK-Belgium interconnector may affect import pricing and availability.
• Begin preparing for the 2027 climate resilience reporting requirements, particularly if your supply chain includes water or infrastructure services.

Bottom line

The UK grid remains in a low-carbon state with strong wind output and no coal use. Regulatory updates from Ofgem, ESO, and DESNZ point to structural shifts in how energy is priced, sourced, and managed. For commercial energy buyers, this is a moment to act—optimise load timing, assess network charge impacts, and align procurement with the evolving capacity and interconnector landscape. These moves will strengthen both cost control and decarbonisation outcomes.