Harrison Miles, Head of Market Analysis and Portfolio Management

Harrison Miles, Head of Market Analysis and Portfolio Management

Cautiously Optimistic Outlook for Winter Energy Prices

President Trump’s tariffs, conflict in the Middle East and concerns around the French nuclear fleet are just some of the factors which could impact wholesale energy prices this winter. Against the backdrop of heightened geopolitical certainty, the national grid operator recently delivered a positive outlook for the UK’s electricity supply this winter.

Harrison Miles, our Head of Trading, will provide TEC’s expert analysis on the energy market at our Midsummer Energy Market Update webinar. We sat down with Harrison to unpick the drivers of wholesale energy prices this winter and how these could affect TEC members.

What is the overall outlook of TEC’s Midsummer Energy Market Update?

Despite a range of distinct factors at play, currently the outlook is relatively settled, especially if you compare it to recent years. Of course, the situation could change very quickly, if, for example, there was another escalation of the conflict in the Middle East. We are currently expecting to achieve EU gas storage mandates ahead of time, which will help erode supply risks. Coupled with this, NESO has said we are not expecting any major outages this winter.

What are the main factors which could impact energy prices this winter?

The major geopolitical factors at play are Trump’s tariffs and the trade war with China, and the Middle East conflict. In addition, gas storage levels and the EU mandate, the performance of the French nuclear fleet and the global LNG balance and Asian demand could all be significant drivers of wholesale prices this winter.  Some of these issues, such as Trump’s tariffs and the Middle East conflict, had an immediate effect on the market but fell by the wayside as quickly as they emerged.

What do you think the biggest risk is currently to wholesale energy price hikes?

The escalation of the conflict in the Middle East would likely have the biggest impact on prices. This is mainly due to fears over the potential impact of Iran closing the Strait of Hormuz, which is the world’s busiest oil shipping channel.

However, whilst it would have a smaller impact a reduction in French nuclear production, looks far more likely to happen.  One of France’s nuclear facilities is already suffering from corrosion problems, and the European heatwave looks set to exacerbate the reduction in production capacity. River levels are dropping, and river temperatures are rising from the heatwave, which reduces the station’s ability to use the river water for cooling the reactor. That would see France requiring more gas fired power generation to compensate, increasing gas demand and increasing gas prices.

What will the role of global LNG and Asian demand be this winter?

We have a large volume of LNG supply coming online over the next five years. Historically, Chinese gas demand has increased to meet supply increases. But with Chinese LNG import levels down to the lowest levels since 2022, it’s unclear if this incoming supply will be met with a corresponding demand increase in China or globally. If we have a glut of supply, this will put downward pressure on prices.

What are the main takeaways for TEC members going into winter 2025/2026?

TEC has a rateable forward buying strategy, with the aim of providing budget certainty and smoothing out market volatility. This means that our members are less affected by wild swings in energy costs.

Whilst the underlying energy market fundamentals are relatively stable, we are facing geopolitical uncertainty on several fronts. The current situation is delicate, and I think with one rogue comment, or missile, we could see market prices start to climb once more. To mitigate this and insulate against any shocks, we have accelerated our Winter 2025 gas cover to complete our seasonal trades, with only monthly shaping remaining. Winter 2025 power is at 90% covered, and we will continue to close the position as per the rateable programme as we have seen less volatility in winter power prices compared to gas. For Summer 2026 onwards for both fuels, we are continuing to follow the rateable programme.

You may also be interested in our webinar we’re hosting on 16th July 2025 at 11am, Midsummer Energy Market Update, for which you can find more information here. If you would like to register, please contact your MSA.