UK Energy Market Report — 23 October 2026

What we’re watching today

• Approval of the Jackdaw gas field and its implications for gas‑network cost recovery.
• The finalised Boiler Upgrade Scheme grant levels and eligibility standards.
• UK Emissions Trading Scheme policy updates and how they affect corporate carbon budgeting.
• Global oil price signals and LNG capacity growth that could influence UK gas import pricing.

Headlines and what they mean

Jackdaw gas field gets green light

The Department for Energy Security and Net Zero (DESNZ) announced the Jackdaw field development has been approved, signalling a modest addition of domestic gas supply at a time when the gas system is transitioning to a lower‑carbon mix. While the field is small, its approval underscores the regulator’s willingness to support new gas projects that can be integrated with future decarbonisation pathways, and it may affect the upcoming consultation on recovering gas‑network costs during the transition source.

Boiler Upgrade Scheme Regulations – grant levels confirmed

DESNZ published the final Boiler Upgrade Scheme regulations, detailing grant categories and maximum award amounts for eligible heat‑pump and high‑efficiency boiler installations. The scheme now offers up to £5,000 for heat‑pump retrofits in non‑domestic premises, with higher tiers for low‑income sites. For commercial buyers, the clarified grant structure provides a clear financial incentive to accelerate building‑stock decarbonisation and reduce long‑term gas demand.

UK Emissions Trading Scheme – policy overview

The latest DESNZ policy paper outlines the UK ETS framework for 2026‑2030, including the allocation methodology, price floor adjustments and expanded coverage of the power and industrial sectors. Companies that have not yet enrolled should review the guidance on market participation to avoid missing out on free‑allocation allowances and to plan for the anticipated rise in carbon prices as the scheme tightens.

Gas system in transition – recovery of network costs

A DESNZ call for evidence on recovering gas‑network costs during the transition highlights the regulator’s intent to shift cost allocation from end‑users to the broader energy system, potentially through cross‑subsidies from low‑carbon electricity or the ETS. The outcome will influence future gas tariffs and could affect budgeting for firms with significant gas‑fueled processes.

Renewables Obligation to Exchequer Scheme expenditure – Q3 2026

DESNZ released data on the Renewables Obligation (RO) to Exchequer Scheme for the July‑September quarter, showing a £1.2 bn outlay supporting on‑shore wind and solar projects. The continued flow of RO funding reinforces the market’s wind‑heavy generation mix, which already accounts for 47.9% of the forecast generation mix today.

Offshore environmental legislation – new compliance regime

New offshore environmental legislation introduced by DESNZ tightens reporting and mitigation requirements for oil and gas installations in the UK Continental Shelf. While primarily affecting upstream operators, the rules may increase compliance costs that could be reflected in upstream gas pricing, indirectly influencing downstream commercial buyers.

Geopolitics and global markets

Global oil and LNG dynamics remain a key backdrop for UK wholesale prices. OilPrice reports that Brent crude is trading around $112 bbl after Citi’s $60 price target was breached, indicating strong upward pressure on oil‑linked fuels and gas‑linked power generation costs. At the same time, LNG Canada has doubled its export capacity, expanding Asian supply options and potentially easing global LNG tightness, which could moderate UK gas import costs. The recent Ofgem approval to retain UK gas import capacity from Europe ensures a safety valve for supply, but the broader market will still feel the impact of high oil prices and the expanding LNG landscape. Finally, the US Energy Information Administration notes that US refineries are operating at very high utilisation rates, supporting global oil demand and reinforcing price support.

The view from the trade desk

The grid forecast shows a carbon intensity of 59 gCO₂/kWh, driven by a wind share of 47.9% and nuclear at 17.9%. Gas contributes only 10.5% of generation, reflecting the low‑carbon environment that benefits energy‑intensive businesses seeking to lock in price certainty. With coal at 0% and imports at 13.3%, the system is well‑positioned to absorb short‑term price spikes, but the modest gas share means any upward pressure on gas prices—whether from network cost recovery or global LNG trends—will be felt more acutely.

What to do this week

• Review eligibility for the Boiler Upgrade Scheme and submit applications for heat‑pump retrofits before the end‑Q4 deadline.
• Assess the impact of the Jackdaw field approval on your gas procurement strategy and consider hedging options ahead of any tariff revisions.
• Enrol in the UK ETS market if not already done, and model the effect of the upcoming carbon price floor on your emissions budget.
• Monitor the Ofgem decision on UK gas import capacity and factor potential supply security benefits into your risk assessments.
• Leverage the low carbon intensity forecast by negotiating power contracts that reference wind‑heavy generation mixes.

Bottom line

The UK power market remains anchored by a low‑carbon generation mix, with wind dominance and a carbon intensity forecast of 59 gCO₂/kWh. Regulatory developments—particularly the Jackdaw field approval, Boiler Upgrade Scheme grant finalisation, and UK ETS policy updates—present both cost‑recovery challenges and decarbonisation opportunities. Global oil price strength and expanding LNG capacity add a layer of price volatility, but the retained gas import capacity provides a safety net. Commercial buyers should act now to secure available grants, align with the UK ETS, and incorporate the low‑carbon grid context into their procurement and budgeting decisions.