UK Energy Market Report — 29 June 2026

What we’re watching today

• DESNZ launches climate security taskforce and heat pump incentives, signalling policy momentum on decarbonisation.
• Carbon intensity remains moderate at 151 gCO2/kWh, with wind and gas dominating the generation mix.
• Global energy markets show strong AI-driven demand and renewed interest in nuclear and renewables.

Headlines and what they mean

UK launches first ever taskforce to strengthen climate security

DESNZ has established the UK’s first dedicated climate security taskforce, reflecting a strategic shift toward treating climate risks as national security priorities source. This move underscores the government’s intent to integrate climate resilience into defence and infrastructure planning, particularly in response to escalating weather extremes and supply chain vulnerabilities. For commercial energy buyers, this signals a longer-term regulatory environment where climate risk disclosure and physical resilience will be increasingly material.

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

A new round of financial support will extend eligibility for a £9,000 heat pump grant to thousands of UK households source. This expansion of the Heat Pump Investment Accelerator Competition, now in round 2, indicates sustained government commitment to decarbonising domestic heating. While primarily a domestic policy, it reinforces the broader push toward electrification, which will influence demand profiles and peak load patterns in the grid over time.

Capacity Market Rules published

The updated Capacity Market Rules have been released, setting the framework for securing grid reliability through long-term contracts source. These rules clarify eligibility, auction mechanisms, and performance requirements for new and existing capacity, including battery storage and demand-side response. For commercial energy buyers, this provides clarity on how to participate in capacity markets and hedge against supply risk, particularly as the UK transitions to a higher-renewables system.

Industry energy needs: refresh of modelling assumptions

DESNZ has published a refreshed set of assumptions for industrial energy demand, reflecting updated efficiency trends and electrification pathways source. The update suggests a slower-than-expected decline in fossil fuel use in some sectors, but also highlights growing potential for low-carbon alternatives. This will inform future policy and investment decisions, particularly for energy-intensive industries seeking to align with net zero targets.

Cost Optimisation Model for Industrial Technologies (COMIT) launched

The COMIT tool is now live, offering a data-driven framework to assess the cost-effectiveness of industrial decarbonisation technologies source. This resource enables businesses to model the financial and emissions impact of switching from gas to heat pumps, electrification, or hydrogen. It supports procurement and investment decisions, particularly for those using the Yolk portal for energy contract optimisation.

Energy trends and prices: April–June 2026

The latest quarterly data shows a continued decline in gas use for power generation, with renewables now accounting for 45% of electricity supply in Q2 2026 source. However, gas remains a key balancing source, particularly during low-wind periods. This reinforces the need for flexible procurement and hedging strategies, especially for firms with high load variability.

Geopolitics and global markets

Global energy markets are being reshaped by AI-driven demand, with data centres now accounting for a growing share of electricity consumption source. This is accelerating investment in both renewable generation and nuclear power, as seen in rising interest in new nuclear fuels source. Meanwhile, China’s growing dominance in clean energy manufacturing and battery technology is reshaping global supply chains source, while the US and EU continue to strengthen energy security through domestic production and diversification source. These trends are driving up demand for low-carbon infrastructure and influencing long-term energy pricing.

The view from the trade desk

Today’s grid mix shows wind contributing 37.1% and gas 36.7%, with carbon intensity forecast at 151 gCO2/kWh — moderate but trending downward. This reflects strong wind output and stable gas dispatch, with solar underperforming due to low generation. For energy buyers, this suggests a relatively low-carbon window during midday and early evening, ideal for scheduling high-load processes. With 151 gCO2/kWh, procurement decisions should prioritise renewable and flexible contracts to capitalise on this trend.

What to do this week

• Review heat pump eligibility and consider early procurement for site upgrades, especially if part of the Heat Pump Investment Accelerator Competition source.
• Use the COMIT tool to model decarbonisation pathways for energy-intensive processes source.
• Assess capacity market participation options ahead of the next auction, using the updated rules source.
• Align procurement strategy with the latest energy trends data, particularly the Q2 2026 shift toward renewables source.
• Engage with the Yolk portal to optimise contracts across your portfolio, leveraging TUS’s 150+ GWh under flex management and +20% accuracy vs. supplier projections.

Bottom line

The UK energy market continues to evolve under strong policy momentum, with DESNZ advancing climate security, heat pump deployment, and industrial decarbonisation. Carbon intensity remains moderate at 151 gCO2/kWh, supported by robust wind and gas generation. Globally, AI-driven demand and a shift toward nuclear and renewables are reinforcing long-term structural trends. For commercial buyers, this is a moment to act: use new tools like COMIT, align with capacity market rules, and prioritise flexibility and low-carbon procurement to future-proof operations.