UK Energy Market Report — 18 October 2026

What we’re watching today

• Green Gas Support Scheme (GGSS) opens for applications – funding for renewable gas projects.
• Clean Heat Market Mechanism revisions ahead of the 2027/28 scheme year – potential changes to heat‑network contracts.
• Europe’s gas reserves dip as winter approaches – pressure on wholesale gas prices.

Headlines and what they mean

Green Gas Support Scheme: open to applications

The Department for Energy Security and Net Zero (DESNZ) has launched the Green Gas Support Scheme, inviting applications from projects that generate low‑carbon gas such as biomethane and hydrogen‑enriched natural gas. The scheme aims to accelerate the decarbonisation of the gas network and offers up to £1 billion in support over the next five years. Commercial buyers with on‑site gas generation or interested in contracting renewable gas should assess eligibility now to lock in future price certainty and sustainability credits. source

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

DESNZ has published a consultation on revisions to the Clean Heat Market Mechanism (CHMM) that will apply from the 2027/28 financial year. Changes under review include the calculation of heat‑network tariffs, eligibility criteria for low‑carbon heat technologies and the role of third‑party aggregators. For businesses operating or planning heat‑network projects, the consultation signals a possible shift towards greater cost‑reflectivity and incentives for heat‑pump and biomass solutions. Early engagement can shape the final rules and protect future procurement budgets. source

Stronger protections for heating oil customers

DESNZ announced new consumer‑level protections for heating‑oil users, including clearer price‑cap mechanisms and a requirement for suppliers to provide advance notice of price changes. While primarily aimed at residential customers, the measures also affect small‑ and medium‑sized enterprises that rely on oil‑fired boilers, offering greater price transparency and a safety net against sudden spikes. Companies should review their oil contracts to ensure they benefit from the new safeguards. source

Guidance: Contracts for Difference, renewables obligation and small‑scale feed‑in tariffs – exemptions and compensation

DESNZ released guidance on which companies have been awarded exemptions or compensation under the Contracts for Difference (CfD) regime, the Renewables Obligation (RO) and small‑scale feed‑in tariffs (FIT). The list clarifies which renewable generators will receive guaranteed payments and which will face reduced support, influencing project financing and revenue forecasts. Energy‑intensive firms with on‑site generation should verify their status to understand cash‑flow implications. source

Energy smart data legislative framework

A new consultation on the Energy Smart Data legislative framework seeks views on data‑sharing obligations for large energy users and suppliers. The aim is to create a national data hub that enables more accurate demand‑response, grid‑balancing and energy‑efficiency programmes. Early adopters could gain access to granular consumption insights, supporting optimisation of contracts and participation in flexibility markets. source

Carbon capture and the renewal of British industry

In a recent speech, DESNZ outlined a roadmap for scaling carbon capture, utilisation and storage (CCUS) to support the decarbonisation of heavy industry. The plan includes funding mechanisms, infrastructure development and a focus on creating viable business models for CCUS projects. Industrial firms should monitor the forthcoming policy details as they may unlock new revenue streams or cost‑reduction opportunities. source

Building an energy system that delivers for all

The department’s latest policy speech reaffirmed the commitment to a net‑zero energy system that is affordable, reliable and inclusive. Key pillars include expanding offshore wind, accelerating low‑carbon heat, and strengthening the electricity market to accommodate more distributed resources. The narrative underscores the regulatory appetite for solutions that reduce carbon intensity while protecting business competitiveness. source

Geopolitics and global markets

Oil prices remain elevated, with the war in Ukraine keeping supply tight into 2027, sustaining price levels around $105 per barrel and adding cost pressure to UK fuel markets source. Europe is also bracing for a winter energy crisis as gas reserves run low, a development that could tighten UK gas imports and lift wholesale gas prices source. The global gas crunch is making Europe’s remaining coal plants temporarily profitable, highlighting the continued relevance of coal‑derived baseload in the short term source. Meanwhile, the United States has offered an additional 17 million barrels from its Strategic Petroleum Reserve, a move that could modestly ease global oil market tightness but underscores the fragility of supply balances source.

The view from the trade desk

The grid forecast shows a carbon intensity of 78 gCO2/kWh – the lowest index reading of the week – driven by a strong wind contribution (37.8%) and high import levels (23.7%). Nuclear remains a steady 20.2% of generation, while gas is limited to 9%, keeping fossil‑fuel exposure modest. For commercial buyers, the mix suggests continued price stability on the electricity side, but the reliance on imports and wind variability means flexibility services and demand‑side response will retain value.

What to do this week

• Review eligibility for the Green Gas Support Scheme and begin the application process for any on‑site biomethane or hydrogen projects.
• Submit comments on the Clean Heat Market Mechanism consultation to influence tariff design before the 2027/28 rollout.
• Audit heating‑oil contracts to ensure they benefit from the newly announced consumer protections.
• Assess your exposure to CfD, RO and FIT regimes and confirm whether your on‑site renewables qualify for exemptions or compensation.
• Explore participation in the Energy Smart Data framework to unlock demand‑response revenue and improve energy‑efficiency reporting.

Bottom line

UK commercial energy buyers face a favourable domestic generation mix with low carbon intensity, but external pressures from high oil prices and a tightening European gas market keep wholesale volatility alive. Leveraging new government schemes – green gas funding, Clean Heat revisions and data‑sharing initiatives – can lock in cost certainty and advance sustainability goals while protecting against external price shocks.