2025 UK Energy Market Review: Gas Down 35%, New Levies, and What's Next
2025: The Year Energy Prices Finally Fell — Then Got Complicated
2025 delivered what UK businesses had been waiting for: prices fell significantly from crisis-era highs. Gas dropped 35% from January's peak to the year's best levels. But it wasn't a straight line — winter spikes, peace talks, trade wars, and a late-year cold snap created volatility throughout. Those who understood the market's rhythm locked in exceptional value. Here's the complete story.
📈 2025 Price Journey: The Full Picture
Monthly average day-ahead prices throughout 2025. Hover for details.
The Year's Story in Four Acts
❄️ Act 1: Winter Peak (Jan–Feb)
The year opened at crisis-era highs. Gas averaged 122.86p in January — cold weather, geopolitical uncertainty, and tight supply created the year's most expensive period. Businesses renewing in Q1 paid premium rates. Power spiked to £124.35/MWh. This was the worst time to lock in contracts.
📉 Act 2: The Great Decline (Mar–May)
Mild weather, strong LNG supply, and easing geopolitical tensions drove a sustained decline. Gas fell from 124p to 82p — a 34% drop in three months. Power followed. Those who locked in April–May secured exceptional value. Trade war headlines added volatility but the trend was clearly down.
☀️ Act 3: Summer Stability (Jun–Sep)
Prices stabilised in the 79–86p range for gas. The Israel-Iran strikes in June caused a brief spike, but markets quickly dismissed it as non-structural. Strong wind generation and healthy storage kept a lid on prices. This was the calm before the winter repricing.
🕊️ Act 4: Peace Talks & Cold Repricing (Oct–Dec)
November's peace talks drove the year's biggest single repricing: Cal-26 fell 9% in one month. December's lows (65.42p on Dec 11) were the year's best buying opportunity. But cold weather and the Troll outage pushed prices back up to close at 74.75p. The lesson: timing matters, and the best prices don't last.
📅 Month-by-Month Breakdown
| Month | ⛽ Gas (p/th) | ⚡ Power (£/MWh) | Key Driver |
|---|---|---|---|
| January | 122.86 | £124.35 | ❄️ Cold weather, winter peak, geopolitical tension |
| February | 124.39 | £107.74 | Power down 13%, gas flat, improved renewables |
| March | 101.86 | £90.99 | 📉 Sharp falls begin — mild weather, LNG supply |
| April | 86.22 | £81.48 | 📉 Trade war volatility, continued decline |
| May | 82.60 | £77.78 | 📉 Approaching summer lows, strong buying window |
| June | 86.61 | £71.43 | 🔥 Israel-Iran spike (brief), power volatile |
| July | 81.06 | £81.44 | ☀️ Summer stability, forward curves rising |
| August | 79.68 | £75.59 | ☀️ Steady, anomaly days skewed power data |
| September | 79.31 | £72.26 | Stable, winter forwards starting to price |
| October | 78.97 | £75.13 | Forwards down 2%, spot volatile (geopolitics) |
| November | 71.53* | £72.55* | 🕊️ Peace talks reprice Cal-26 down 9% |
| December | 74.75* | £81.50* | ❄️ Cold repricing + Troll outage, year close |
* Nov/Dec figures are forward contract closes (Jan-26) as market transitioned from day-ahead to near-term forwards
📊 2024 vs 2025: Year-on-Year Comparison
⛽ Gas Comparison
⚡ Power Comparison
The Real Story: Trajectory Matters More Than Average
2024's average (82.50p gas) was pulled down by a cheap February (56.25p low). 2025's average was pulled up by an expensive January (122.86p). But the trajectory tells the real story: 2024 ended with prices rising into winter (121.90p in November). 2025 ended with prices falling from peak — year-end at 74.75p was 9% below 2024's average and 39% below January's peak. 2025 was the year the market finally normalised.
📆 2025 Key Events Timeline
📋 Beyond the Numbers: What Else Happened in 2025
Wholesale prices tell only part of the story. 2025 also brought new levies, regulatory changes, and supplier failures that affect your total energy costs.
☢️ Nuclear RAB Levy Launched
1 Nov 2025A new government levy of 0.3455p/kWh hit all electricity bills from November 2025, funding nuclear infrastructure like Sizewell C. For a business using 100,000 kWh annually, that's an extra £345/year — and the rate is expected to rise to ~0.45p/kWh by summer 2027.
🏭 EII Support Levy Continues
Since Apr 2024The 0.15p/kWh EII Support Levy (sometimes called "Network Charging Compensation Charge") continued throughout 2025, funding rebates for energy-intensive industries. Combined with the Nuclear RAB Levy, businesses now pay 0.4955p/kWh in government levies alone — nearly half a penny on every unit before your actual energy costs.
Understand the EII Support Levy →🍅 Tomato Energy Ceases Trading
6 Nov 2025Tomato Energy entered administration in November 2025, with approximately 14,000 customers transferred to British Gas via Ofgem's Supplier of Last Resort process. The CEO cited insufficient capital to operate in the current market — a stark reminder that supplier stability matters as much as price.
⚡ TNUoS Standing Charge Increase Coming
1 Apr 2026Announced in 2025 but hitting bills in April 2026: Transmission Network Use of System (TNUoS) standing charges are increasing by an average of 94% in some regions. This could add £500–£5,000+ annually depending on your location and meter type.
Prepare for TNUoS increases →📊 The Hidden Cost Increases of 2025
While wholesale prices fell in 2025, government levies added nearly 0.5p/kWh to every unit — offsetting some of the savings. This is why tracking the total cost matters, not just the headline rate.
💡 What 2025 Taught Us
1. Forwards Are Rational, Spot Is Noise
Throughout 2025, day-ahead prices swung wildly on weather and headlines. But forward contracts — what your supplier uses to quote you — stayed disciplined. October proved this clearly: spot crashed 35% in one day on geopolitical news, but Cal-26 moved only 2%. Your renewal is based on forwards, not spot noise.
2. The Best Prices Don't Last
December's lows (65.42p) lasted just days before cold repricing pushed prices back up. November's peace-talks discount (71.53p) was gone within weeks. Those who waited for "the perfect bottom" often missed it. Those who locked on "good enough" secured genuine value.
3. Seasonal Patterns Still Matter
January was the year's most expensive month. May–June offered excellent value. December's cold repricing was predictable. The fundamentals haven't changed: winter = premium, summer = discount. Plan your renewals around this reality.
4. Geopolitics Creates Opportunity
Peace talks repriced Cal-26 down 9% in November. The Israel-Iran spike created a dip when fears faded. Geopolitical events create volatility — but volatility creates buying windows. Those who understood this locked in during the dips.
5. Supply Is Abundant — This Is Structural
LNG arrivals, Norwegian production, healthy storage — supply was never the issue in 2025. Even the Troll outage couldn't sustain a rally because alternative supply was ready. This is the new normal: abundant supply keeps a lid on structural price rises.
🔮 Looking Ahead: 2026 Outlook
2025 ended with forward prices significantly below where they started. What does 2026 hold?
🟢 Downside Factors
- Peace talks progress could ease geopolitical premium further
- LNG supply remains abundant globally
- EU storage healthy heading into 2026
- Renewable capacity continues to grow
🔴 Upside Risks
- Peace talks collapse snaps geopolitical premium back
- Cold winter 2025/26 draws down storage faster
- Asian LNG demand competes for cargoes
- Supply disruptions (maintenance, outages)
Our View for 2026
The structural picture is positive: abundant supply, growing renewables, and easing geopolitical tensions suggest prices will stay below crisis-era highs. But volatility will remain — seasonal patterns, weather surprises, and geopolitical headlines will create swings. The businesses that win in 2026 will be those who lock in during dips and don't chase perfect timing. Current forward prices (Q2-26 at 66.71p gas, £71.40 power) represent genuine value compared to where we started 2025.
2025 Rewarded Those Who Understood the Market
From January's 122.86p peak to December's 65.42p low, 2025 offered a 47% price range. Those who locked in the right window saved significantly. Those who waited for perfect timing often missed the opportunity entirely.
Don't let 2026 catch you out.
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