UK Energy Market Report — 27 June 2026

What we’re watching today

• High grid carbon intensity (202 gCO2/kWh) signals elevated emissions from fossil generation.
• Ofgem’s long-duration storage decisions and BSC changes could reshape market participation.
• Global oil prices fall on renewed Iranian supply expectations and Hormuz recovery.

Headlines and what they mean

Ofgem boosts long duration storage to secure more homegrown energy for customers

Ofgem has announced a series of minded-to decisions in the first window of its long-duration electricity storage (LDES) programme, reinforcing its commitment to accelerating homegrown energy security source. The move signals a strategic pivot toward firm, dispatchable capacity to complement variable renewables, particularly as winter peaks loom. For commercial energy buyers, this implies growing opportunities to engage with LDES assets through flexible contracts or direct procurement, especially where grid congestion or balancing needs are high. The decision also underscores the increasing importance of non-gas firming options in the UK’s decarbonisation pathway.

Ofgem P512 Balancing and Settlement Code (BSC) proposed changes

Ofgem has published proposed updates to the P512 BSC, which governs how electricity is balanced and settled across the grid source. The changes aim to improve transparency, reduce settlement disputes, and better reflect real-time grid conditions. For large energy users and suppliers, this means tighter accountability on consumption and generation data, with greater emphasis on accuracy and timeliness. The updates may also affect how flexibility and demand-side response are valued, particularly in the context of dynamic pricing and balancing markets. Early engagement with these proposals is advised to prepare for implementation.

DESNZ launches first ever taskforce to strengthen climate security

The Department for Energy Security and Net Zero (DESNZ) has established the UK’s first dedicated taskforce to strengthen climate security, focusing on systemic risks from extreme weather, supply chain fragility, and energy system resilience source. This marks a shift from reactive to proactive risk management, with implications for energy infrastructure planning and procurement strategies. For businesses, this signals a growing emphasis on climate risk disclosure and scenario planning, particularly for long-term contracts and asset siting. The taskforce will likely inform future policy on resilience standards, especially for critical infrastructure.

Thousands of homes will be eligible for £9,000 off a heat pump

DESNZ has confirmed that thousands of homes will qualify for a £9,000 grant towards heat pump installation, expanding the Heat Pump Investment Accelerator Competition source. While targeted at domestic consumers, the policy reflects a broader push to decarbonise heating and reduce gas dependency. For commercial energy buyers, this reinforces the long-term trend of shifting heat demand away from gas, particularly in mixed-use and multi-tenanted buildings. It also highlights the increasing role of government incentives in driving electrification, which may affect future energy mix planning and procurement models.

DESNZ publishes updated industry energy needs modelling

DESNZ has released a refresh of its modelling assumptions for industrial energy demand, reflecting updated data on decarbonisation pathways and technology adoption source. The update suggests a faster transition in energy-intensive sectors than previously projected, particularly in steel, cement, and chemicals. For energy buyers in these sectors, this implies tighter timelines for switching to low-carbon technologies such as hydrogen or electrified processes. It also underscores the need for early engagement with suppliers on long-term contracts that include decarbonisation milestones.

Geopolitics and global markets

Global crude prices are declining as traders anticipate increased Iranian oil supply following the resumption of shipping through the Strait of Hormuz source. Saudi Arabia is reportedly preparing to cut oil prices to maintain market share, while the UAE’s exit from OPEC+ has reduced the group’s production capacity source. Meanwhile, Kazakhstan has cut gas output after a drone strike on a Russian processing plant, raising concerns over Central Asian supply stability source. These dynamics are contributing to a more stable, albeit uncertain, global energy outlook, with implications for UK wholesale gas and power prices, particularly during periods of high demand or grid stress.

The view from the trade desk

Today’s grid carbon intensity of 202 gCO2/kWh, driven by a 48.5% gas share and only 25.1% wind, indicates a high-emission generation mix. With solar output negligible at 0.4%, the grid is heavily reliant on gas for baseload and balancing. This presents a clear opportunity for businesses with flexible loads to shift consumption to times when wind output increases. The current mix also reinforces the value of on-site generation, storage, and demand-side response — particularly given Ofgem’s focus on long-duration storage and market rule updates.

What to do this week

• Review your current energy contract for flexibility clauses and assess potential for shifting load to lower-carbon windows.
• Engage with Ofgem’s P512 BSC consultation to understand how upcoming settlement changes may affect your billing and data reporting.
• Evaluate participation in the Heat Pump Investment Accelerator Competition Round 2 if your organisation owns or manages buildings with heating needs.
• Use the updated DESNZ industry energy needs model to stress-test your decarbonisation roadmap and supplier engagement strategy.
• Explore long-duration storage partnerships or procurement options, particularly if you operate in a high-demand or grid-constrained area.

Bottom line

Today’s high carbon intensity and gas-heavy generation mix highlight the ongoing reliance on fossil fuels despite policy momentum toward decarbonisation. Ofgem’s long-duration storage push and BSC updates signal a maturing, more resilient market. Global oil price declines reflect easing geopolitical tensions, but supply risks remain. UK energy buyers should act now to lock in flexibility, engage with evolving regulations, and align procurement with long-term decarbonisation goals. The Yolk portal and TUS’s 150+ GWh of flex management can support these efforts with real-time visibility and optimisation.