UK Energy Market Report — 02 November 2026

What we’re watching today

• UK ETS allocation table released – impacts compliance costs for large emitters.
• Green light for a new undersea power cable – could alter import dynamics.
• Smart Secure Electricity Systems (SSES) tariff code changes – affect flexible demand contracts.
• Boiler Upgrade Scheme statistics – indicate progress on decarbonising heat.
• Domestic energy price indices – provide the latest price trends for businesses.

Headlines and what they mean

UK ETS Allocation Table for operators of installations

The Department for Energy Security and Net Zero (DESNZ) has published the latest UK Emissions Trading Scheme allocation table, detailing free‑allowance allocations for 2027‑2028. Companies with high‑carbon processes must review their allowance holdings to avoid penalties, and may need to adjust procurement strategies or invest in low‑carbon technologies to stay within budget source.

Major undersea power cable given green light

DESNZ approved a new high‑capacity undersea interconnector linking the UK to continental Europe. The cable will increase import capacity, improve system resilience and could bring competitive pressure on wholesale electricity prices, especially during low‑wind periods. Stakeholders should monitor the project timeline for potential impacts on contract negotiations source.

Smart Secure Electricity Systems (SSES) tariff interoperability: code modifications for Phase 1a

Phase 1a of the SSES tariff framework now includes revised code to enable smoother interoperability between flexible demand products and the grid. This change lowers the administrative burden for businesses adopting demand‑response or behind‑the‑meter storage, making flex‑management more attractive. Energy buyers should engage suppliers to ensure their contracts can leverage the updated tariff structures source.

Boiler Upgrade Scheme statistics: September 2026

The latest DESNZ data show that 1.2 million boilers have been upgraded under the scheme, delivering an estimated 3.4 MtCO₂ avoided emissions to date. The programme continues to provide cost‑effective decarbonisation for commercial heating, and the uptake trend suggests further eligibility for rebate funding in the coming months source.

Domestic energy price indices

DESNZ released the most recent domestic energy price indices, showing a modest rise in electricity tariffs (+1.2% YoY) and a sharper increase in gas prices (+3.5% YoY). These movements reflect higher wholesale gas costs and the ongoing transition to renewable generation. Businesses should factor these trends into budgeting and consider fixed‑price contracts where appropriate source.

Geopolitics and global markets

Oil prices have slipped around 3 % following optimism over a potential Iran peace deal, easing pressure on input costs for energy‑intensive industries source. At the same time, Europe is reassessing its oil refinery phase‑down strategy, which could tighten refined product supplies and sustain higher gasoline and heating‑oil prices in the near term source. These dynamics, combined with a 34 % jump in US gasoline prices ahead of the midterm elections, add volatility to global fuel markets that can spill over into UK wholesale power pricing source.

The view from the trade desk

The grid is forecast to run at a moderate carbon intensity of 133 gCO₂/kWh, underpinned by a strong wind contribution of 36.1 % and a still‑significant gas share of 31.6 %. This mix suggests that renewable generation will continue to buffer price spikes, but the reliance on gas means that any wholesale gas price movement will still be felt by commercial customers. Flex‑management and demand‑response remain valuable tools to navigate this landscape.

What to do this week

• Review your UK ETS allowance position and model scenarios for the new allocation table.
• Engage with your supplier to confirm eligibility for the updated SSES tariff code and explore flex‑management options.
• Assess the impact of the upcoming undersea interconnector on import pricing and consider hedging strategies.
• Evaluate eligibility for the Boiler Upgrade Scheme rebates for any remaining high‑efficiency boiler projects.
• Re‑price your energy budget using the latest domestic price indices and consider fixed‑price contracts where volatility appears likely.

Bottom line

Regulatory updates are sharpening the focus on emissions compliance, flexible tariffs and renewable‑driven import capacity, while global oil market softness offers a modest reprieve for wholesale prices. With carbon intensity at 133 gCO₂/kWh and wind supplying over a third of generation, businesses that leverage flex‑management and stay ahead of ETS allocations will be best positioned to control costs in the coming weeks.