UK Energy Market Report — 28 June 2026

What we’re watching today

• Ofgem’s proposed BSC changes signal a shift toward more dynamic balancing mechanisms.
• DESNZ’s new climate security taskforce and heat pump incentives highlight accelerating decarbonisation policy.
• Global AI energy demand is driving renewed interest in nuclear and fuel cell technologies.

Headlines and what they mean

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

Ofgem has announced minded-to decisions for the first window of its long-duration electricity storage (LDES) programme, reinforcing the UK’s commitment to grid resilience and homegrown capacity source. This move is a direct response to growing intermittency risks as wind and solar penetration rise. For commercial energy buyers, this signals a structural shift: storage is no longer a niche asset but a core component of future energy security. The LDES programme could enable greater participation in balancing markets and support price stability during peak demand. With 150+ GWh under flex management via the Yolk portal, this development aligns with TUS’s strategy to leverage storage for cost and carbon optimisation.

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 climate security taskforce, aimed at integrating climate risk into national infrastructure planning source. This reflects a growing recognition that energy security is inseparable from climate resilience. For businesses, this means regulatory and financial incentives will increasingly favour assets and strategies that reduce exposure to climate-related disruptions—such as extreme weather events or supply chain shocks. The move also underscores the government’s intent to embed climate risk assessment into procurement and investment decisions.

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

DESNZ has confirmed that thousands of households will qualify for a £9,000 grant towards heat pump installation, part of the Heat Pump Investment Accelerator Competition (Round 2) source. While this is a domestic policy, it has indirect implications for commercial energy buyers. As heat pumps become more widespread, demand for low-carbon electricity will rise, particularly in winter. This could tighten supply during cold periods and influence the value of flexible demand and storage. Businesses with thermal loads should assess how this shift may impact their future energy profiles and procurement strategy.

P512 Balancing and Settlement Code (BSC) proposed changes

Ofgem has published proposed changes to the P512 BSC, which governs how energy is balanced and settled across the grid source. The updates aim to improve transparency and responsiveness in the settlement process, particularly for distributed energy resources and demand-side response. For commercial buyers, this means greater clarity and predictability in settlement outcomes, reducing financial risk from imbalances. It also opens the door for more granular participation in flexibility markets, especially for those using the Yolk portal to manage demand across multiple sites.

Decision to grant E.ON Next Energy Limited a limited derogation from standard licence condition 22B

Ofgem has granted E.ON Next a limited derogation from standard licence condition 22B, which relates to the obligation to supply electricity to customers under certain conditions source. This reflects a pragmatic approach to allowing innovation in supply models, particularly around dynamic pricing and customer engagement. While the derogation is specific to one supplier, it sets a precedent for regulatory flexibility in the evolving energy market. For commercial buyers, it signals that suppliers are being permitted to experiment with new service models—potentially offering more tailored, cost-effective contracts in the future.

Geopolitics and global markets

Global energy markets are being reshaped by AI-driven demand, with the $7 trillion AI boom accelerating investment in power infrastructure and fuel cells source. This is pushing nations to reconsider nuclear and clean energy deployment, as seen in the renewed interest in nuclear power driven by AI, war, and climate pressures source. Meanwhile, China’s dominance in clean energy manufacturing continues to grow, with its battery sector betting on sodium-ion tech amid lithium volatility source. These trends reinforce the strategic importance of domestic capacity and supply chain resilience—key drivers behind the UK’s LDES and heat pump initiatives.

The view from the trade desk

Today’s grid mix shows wind contributing 43.6%, gas 25%, nuclear 13.7%, and imports 10%, resulting in a forecast carbon intensity of 108 gCO2/kWh—well below the national average. This low-carbon profile presents a strong opportunity for businesses to align procurement with sustainability goals. With solar output at just 1.4%, demand is likely to be met primarily by wind and gas, making gas a key balancing asset. The current generation mix supports a strategy of shifting load towards midday and early evening, where wind is most abundant. For buyers managing demand across multiple sites, this is a prime moment to activate flexibility through the Yolk portal.

What to do this week

• Review your procurement contract’s flexibility clauses in light of Ofgem’s P512 BSC updates.
• Assess potential exposure to winter heat pump demand spikes, especially if you have thermal load.
• Engage with your supplier to understand how long-duration storage incentives may affect future pricing.
• Evaluate whether your current load profile can be optimised to align with today’s wind-heavy generation mix.
• Check eligibility for the Heat Pump Investment Accelerator Competition Round 2 if you are considering decarbonising heating infrastructure.

Bottom line

The UK’s energy landscape is being reshaped by regulatory momentum around storage, climate security, and decarbonisation. With today’s low carbon intensity and strong wind generation, commercial buyers have a clear window to optimise both cost and carbon performance. The global AI energy boom and China’s clean tech dominance underscore the urgency of securing homegrown capacity. Proactive engagement with flexibility mechanisms, supplier innovation, and government incentives will be key to future resilience and competitiveness.