UK Energy Market Report — 26 July 2026

What we’re watching today

• Carbon intensity forecast at a historic low 72 gCO₂/kWh, driven by solar supplying over 40% of generation.
• Domestic energy price indices released this week hint at upward pressure on commercial electricity costs.
• Heat‑pump deployment data for June 2026 signals continued decarbonisation of UK heating.

Headlines and what they mean

Research: Greenhouse gas reporting – conversion factors 2026

The Department for Energy Security and Net Zero (DESNZ) has published updated conversion factors for greenhouse‑gas reporting. These factors underpin the calculation of Scope 1‑3 emissions for all UK businesses. For commercial energy buyers, the new values mean that historic carbon‑intensity claims may need revisiting, and future procurement contracts should reference the 2026 factors to avoid mismatched reporting. source

Official Statistics: Heat pump deployment – June 2026

June saw a further rise in heat‑pump installations, confirming the momentum of the UK’s electrification agenda. The data show a 7% month‑on‑month increase, with the residential sector accounting for the bulk of new units. For businesses with on‑site heating, the trend suggests a growing pool of skilled installers and potential bulk‑purchase discounts, while also signalling future reductions in gas demand. source

Domestic energy price indices (latest release)

The latest domestic price indices, published by DESNZ, show a 2.3% rise in the electricity price index over the past quarter. The increase is driven primarily by higher wholesale gas prices and a modest uplift in network charges. Commercial buyers should expect their next quarterly bill to reflect this upward trend, making demand‑side management and flexible contracts more valuable. source

Annual domestic energy bills (2025‑26)

Annualised domestic energy bill data reveal that the average household bill has crossed the £1,800 mark for the first time. While the figure is a household metric, it signals broader cost pressures that can spill over into commercial tariffs, especially for small‑to‑medium enterprises that benchmark against residential rates. source

Accredited official statistics: Energy Trends – UK electricity

The Energy Trends release provides a granular view of electricity generation, showing solar at 40.8% of the mix, imports 20.3%, nuclear 12.5%, and wind 7.7%. The high solar share is a key driver of the low carbon‑intensity forecast and reduces reliance on gas‑fired generation, which remains at 9%. source

Geopolitics and global markets

• China doubles down on clean energy – China’s aggressive push for renewables, even as coal use climbs, signals a long‑term reduction in global oil demand, which could ease price pressure on UK diesel and aviation fuels. source
• Saudis push maritime coalition – Saudi Arabia’s coordination of a maritime coalition to protect oil shipments adds a layer of supply security, supporting a relatively stable Brent price environment that underpins UK oil‑linked costs. source
• US oil drillers cautious as WTI hovers near $85/bbl – The US market’s cautious stance, with West Texas Intermediate near $85, suggests a ceiling for global oil prices that will temper wholesale fuel cost spikes in the UK. source
• Ukraine strikes Lukoil’s Volgograd refinery – Renewed drone attacks on Russian refining capacity re‑introduce geopolitical risk, potentially tightening global oil supplies and adding a premium to European crude imports. source
• China’s crude oil imports fell in Q2 – The EIA reports a decline in China’s crude imports, reinforcing the narrative of reduced demand from the world’s biggest oil consumer, which can help keep global oil markets balanced. source

The view from the trade desk

The grid is operating at a forecast carbon intensity of 72 gCO₂/kWh – the lowest level on record – thanks to solar delivering 40.8% of generation. Imports and nuclear provide a further 32.8%, while gas is limited to 9%. This mix reduces exposure to gas price volatility and creates a favourable backdrop for contracts that reward low‑carbon electricity. Buyers with flexible demand can capture additional savings by shifting load to periods of high solar output.

What to do this week

• Review the latest domestic price indices and model the impact on your quarterly energy spend.
• Consider bulk procurement of heat‑pump units or service contracts to lock in installer capacity ahead of the summer rush.
• Align your Scope 1‑3 reporting with the new 2026 conversion factors to ensure compliance and credibility.
• Evaluate the benefit of a flex‑management contract with TUS (150 + GWh under management, delivering >20% savings vs supplier forecasts) to capture low‑carbon, low‑price electricity.
• Monitor oil price movements after the Saudi maritime coalition announcement and the Ukraine refinery strike for any downstream fuel cost implications.

Bottom line

UK commercial energy buyers face a dual environment: a grid increasingly powered by cheap, low‑carbon solar, and a domestic price trajectory that is nudging upwards. By leveraging flexible demand, aligning emissions reporting with the latest conversion factors, and staying alert to global oil‑market dynamics, businesses can protect margins while supporting the net‑zero transition.