UK Energy Market Report — 14 October 2026

What we’re watching today

• Ofgem’s new guidance on evidencing wider value in procurement decisions.
• DESNZ’s stronger protections for heating oil customers and the government response to the CMA heating‑oil market study.
• Upcoming revisions to the Clean Heat Market Mechanism for 2027/28.
• Guidance on participation in the UK Emissions Trading Scheme markets.

Headlines and what they mean

Ofgem – Evidencing wider value in procurement decisions: guidance

The regulator has published a consultation on how buyers can demonstrate the broader value of energy contracts beyond price, including sustainability, reliability and flexibility benefits. For commercial energy buyers this signals a shift towards procurement frameworks that reward low‑carbon and resilient supply, encouraging the use of tools like TUS’s flex‑management platform which delivers 20% more volume than supplier forecasts. source

DESNZ – Stronger protections for heating oil customers

DESNZ announced new consumer‑focused rules aimed at preventing unfair contract terms and ensuring transparent pricing for heating oil. Companies that rely on oil‑fired boilers should review existing contracts for compliance and consider diversifying to cleaner heat solutions where possible. source

DESNZ – Policy paper: Heating oil: government response to CMA market study

The government’s response to the Competition and Markets Authority study outlines measures to increase competition and improve price transparency in the heating oil market. This may lead to modest price moderation but also underscores the strategic advantage of moving towards low‑carbon heat sources such as heat networks or electric heat pumps. source

DESNZ – Clean Heat Market Mechanism: revisions ahead of the 2027/28 scheme year

A consultation on the next iteration of the Clean Heat Market Mechanism (CHMM) seeks feedback on eligibility criteria, subsidy levels and verification processes. Buyers should monitor the outcome as it will affect the economics of large‑scale heat‑pump and biomass projects, potentially unlocking additional funding for decarbonisation programmes. source

DESNZ – Guidance: Taking part in the UK Emissions Trading Scheme markets

New guidance clarifies reporting obligations, allocation methods and compliance timelines for participants in the UK ETS. For corporates with significant Scope 1 emissions, early alignment can reduce exposure to future carbon price spikes and support internal carbon budgeting. source

Geopolitics and global markets

Oil prices remain above $90 per barrel, reflecting persistent inflationary pressures despite broader market optimism (Wall Street sees inflation easing). Record tanker rates are stranding heavy crude in the Americas, tightening freight capacity and adding a cost premium to imported oil (Record tanker rates). At the same time, a disruption to Middle‑East LNG shipments is reshaping European gas markets, potentially lifting spot gas prices and influencing UK gas‑linked power costs (Stranded Middle East LNG supply). Finally, Saudi Arabia’s policy shifts continue to inject volatility into the oil market, reinforcing the need for hedging strategies (Saudi Arabia wild card).

The view from the trade desk

The grid forecast shows a moderate carbon intensity of 121 gCO₂/kWh, driven by a generation mix of 34.9% wind, 27.2% gas, 19.4% nuclear and 11.9% biomass. The strong wind contribution helps keep intensity down, but the reliance on gas means price signals from the global LNG market will still affect wholesale rates. Buyers with flexible demand can benefit from the current wind surplus, while those exposed to gas‑linked tariffs should watch the LNG news closely.

What to do this week

• Review existing heating‑oil contracts against the new consumer‑protection rules and assess alternatives.
• Incorporate Ofgem’s wider‑value procurement criteria into upcoming tender specifications.
• Evaluate eligibility for the Clean Heat Market Mechanism under the proposed 2027/28 revisions.
• Align internal carbon accounting with the updated UK ETS guidance to avoid compliance surprises.
• Consider short‑term hedges on oil and gas exposure given the elevated Brent price and LNG supply disruptions.

Bottom line

Regulatory activity is pushing UK commercial buyers towards more transparent, low‑carbon procurement and tighter consumer safeguards, while global oil and gas market turbulence keeps wholesale price risk elevated. Leveraging flexible demand, engaging with emerging heat‑decarbonisation schemes and staying ahead of carbon‑pricing rules will be key to managing costs and meeting sustainability targets this quarter.