UK Energy Market Report — 1 July 2026

What we’re watching today

• Carbon intensity forecast at 242 gCO2/kWh (very high)
• Gas generation at 57.6%, renewables at just 7.4%
• Ofgem’s RIIO-ET3 and RIIO-GT3 consultations underway
• DESNZ confirms Scotland’s high potential for new nuclear

Headlines and what they mean

Scotland has ‘high potential’ for new nuclear development

DESNZ has confirmed that Scotland holds significant potential for future nuclear power plant siting, based on updated research into geological and infrastructural suitability source. This aligns with broader government ambitions to expand low-carbon generation capacity, particularly in regions with strong grid connectivity and existing industrial infrastructure. For commercial energy buyers, this signals a long-term shift toward greater energy security and decarbonisation, though deployment timelines remain uncertain. The findings may influence future power procurement strategies, particularly for energy-intensive sectors seeking stable, low-carbon supply.

Draft Electricity and Gas Transmission Reporting Guidance (RIIO-ET3 and RIIO-GT3)

Ofgem has published draft reporting and guidance for the upcoming RIIO-ET3 and RIIO-GT3 regulatory periods, which will shape electricity and gas transmission networks through to 2035 source. The proposals include enhanced performance metrics, clearer cost accountability, and updated asset management frameworks. For non-domestic energy buyers, this implies greater transparency in network charges and potential volatility in transmission cost pass-throughs. Early engagement with Ofgem’s consultation is recommended to anticipate cost impacts under the new framework.

Renewables Obligation: Certificates and Generation – March 2026

DESNZ’s latest data shows renewable generation under the Renewables Obligation reached 11.3 TWh in March 2026, with wind and solar contributing 6.2 TWh and 1.4 TWh respectively source. While wind output remains below target, the continued growth in solar and onshore wind capacity suggests momentum in the sector. This data supports the case for long-term renewable procurement, particularly for businesses aiming to meet net-zero commitments. However, low output in June (wind 5.8%, solar 1.6%) highlights ongoing intermittency risks.

Road fuel prices and consumption: June 2026

Official statistics show average petrol prices rose to £1.78 per litre and diesel to £1.86 per litre in June 2026, with consumption stable at 3.7 million litres per day source. These figures reflect sustained inflationary pressure in transport fuel, driven by global crude volatility and refining constraints. For fleet operators and logistics firms, this reinforces the urgency of electrification and fuel efficiency programmes. The data also supports the case for fixed-term fuel contracts to hedge against further price increases.

Geopolitics and global markets

Global oil markets remain volatile, with US crude output setting a new monthly record and inventories declining amid slow Hormuz flows source. This has contributed to a broader market tightening, with Brent benchmark volatility increasing due to supply risks from the Middle East. Meanwhile, demand for LNG is projected to surge by 65% by 2050, driven by Asia’s energy transition and growing industrial demand source. Thailand’s interest in US LNG projects and India’s continued reliance on Russian oil underscore global supply diversification trends. These dynamics directly influence UK wholesale electricity and gas prices, particularly through European gas market linkages and global oil-linked gas pricing.

The view from the trade desk

Today’s grid mix shows a heavy reliance on gas (57.6%) and imports (14.9%), with renewables contributing just 7.4%. Carbon intensity at 242 gCO2/kWh is classified as very high, indicating elevated emissions from electricity generation. This context supports a strategic focus on demand-side flexibility and load shifting during peak hours. Businesses with on-site generation or storage should consider active management to reduce exposure to high-carbon, high-cost grid periods. The Yolk portal can be used to monitor real-time carbon and price signals for optimal procurement timing.

What to do this week

• Review your energy procurement strategy in light of Ofgem’s RIIO-ET3 and RIIO-GT3 consultation, particularly on transmission cost assumptions.
• Evaluate fixed-term contracts for gas and electricity, given current high carbon intensity and volatility in global oil and LNG markets.
• Assess fleet fuel contracts, especially for diesel, given June 2026 prices and sustained global crude volatility.
• Explore opportunities to align procurement with Scotland’s emerging nuclear potential, particularly for long-term, low-carbon supply.
• Use the Yolk portal to benchmark real-time grid carbon intensity and adjust load profiles where feasible.

Bottom line

High grid carbon intensity and reliance on gas underscore the urgency of strategic energy procurement. Ofgem’s RIIO-ET3 and RIIO-GT3 consultations signal long-term infrastructure reforms, while DESNZ’s nuclear siting research in Scotland points to future low-carbon capacity. Global oil and LNG trends suggest continued volatility, reinforcing the need for fixed-term contracts and demand-side flexibility. Businesses should act now to secure cost and carbon stability.