UK Energy Market Report — 28 July 2026

What we’re watching today

• Low carbon intensity forecast of 72 gCO₂/kWh and a solar‑led generation mix.
• Updated GHG conversion factors that will affect corporate reporting.
• Heat‑pump deployment data confirming accelerating electrification of heating.
• Domestic price indices signalling near‑term cost trends for commercial users.

Headlines and what they mean

Research: Greenhouse gas reporting – conversion factors 2026

The Department for Energy Security and Net Zero has published the 2026 conversion‑factor tables used for GHG reporting source. The new factors reflect updated emission intensities for electricity, gas and other fuels, meaning that any corporate Scope 2 or Scope 3 calculations will need to be refreshed. For commercial buyers, this could tighten the carbon‑intensity profile of contracted electricity and affect sustainability KPIs, especially where contracts are benchmarked against historic factors.

Official Statistics: Heat pump deployment – June 2026

June 2026 saw a record‑high installation rate for heat pumps, according to DESNZ source. The data shows a 12 % quarter‑on‑quarter increase, driven largely by the £5,000 installer grant and the £150 winter bill discount scheme. The trend signals a shift away from gas‑fired heating, reducing exposure to future gas price volatility and aligning with the UK’s net‑zero heating roadmap.

Domestic energy price indices

The latest domestic energy price indices released by DESNZ source show a 3.2 % rise in the electricity price index over the past month and a 2.8 % rise in the gas index. While commercial tariffs are not directly tied to the domestic index, the movement reflects broader wholesale price pressures that are likely to filter into business contracts, especially for those on variable or index‑linked rates.

Millions reminded to get £150 off energy bills this winter

DESNZ’s reminder that households can claim a £150 winter‑bill discount source underscores the government’s continued support for energy affordability. For businesses, the scheme may reduce overall demand spikes during peak winter periods, indirectly supporting grid stability and potentially easing peak‑price exposure for large‑scale consumers.

Energy Trends: UK electricity

The Energy Trends statistical release for UK electricity source confirms that solar now accounts for 40.8 % of generation, with imports at 20.3 % and nuclear at 12.5 %. Gas contribution has fallen to 9 %, while wind provides 7.7 %. This shift underpins the low carbon‑intensity forecast and suggests that contracts tied to renewable‑heavy portfolios will become increasingly mainstream.

Geopolitics and global markets

China’s dual strategy of expanding clean‑energy capacity while still growing coal output signals continued global demand for both renewables and fossil fuels source. Meanwhile, Argentina’s record Vaca Muerta oil production has not translated into broader economic gains, highlighting the fragility of supply‑side optimism in emerging markets source. AI‑driven electricity demand is being characterised more by inflexibility than volume, a nuance that could affect peak‑load pricing in Europe source. Together, these dynamics feed into wholesale price formation for UK buyers, especially as European gas storage remains tight and oil price signals stay volatile.

The view from the trade desk

The grid is operating at a forecast carbon intensity of 72 gCO₂/kWh, comfortably in the “low” band. Solar’s 40.8 % share, bolstered by strong summer generation, is the primary driver of this low intensity, while gas’s reduced 9 % contribution limits fossil‑fuel exposure. For commercial customers, the current mix suggests that contracts with a renewable‑heavy tilt will deliver both cost stability and sustainability benefits, especially as the market moves away from coal and gas‑linked pricing.

What to do this week

• Review your Scope 2 reporting methodology and update emission factors to the 2026 conversion tables.
• Assess the feasibility of adding heat‑pump‑compatible electricity contracts to support your decarbonisation roadmap.
• Compare your current electricity price structure against the latest domestic price index trends to gauge exposure to upcoming price rises.
• Consider negotiating a renewable‑percentage clause that reflects the grid’s 40 % solar contribution, locking in low‑carbon supply.
• Monitor the upcoming Energy Trends release for electricity (expected 7 days) for any shifts in wind or import volumes that could affect price volatility.

Bottom line

The UK grid is now firmly solar‑dominant, delivering a record low carbon intensity that benefits sustainability‑focused buyers. Updated GHG conversion factors and accelerating heat‑pump uptake tighten the regulatory environment, while modest domestic price index rises hint at upward pressure on commercial tariffs. Aligning contracts with the renewable‑heavy mix and revisiting reporting assumptions will position businesses to manage cost and carbon risk effectively in the weeks ahead.