Protecting TEC members from unsettling and volatile energy prices this winter

Date: September 9, 2026

Protecting TEC members from unsettling and volatile energy prices this winter

Harrison Miles, Head of Trading, TEC

 

Energy prices are facing mounting pressure from a combination of geopolitical uncertainty, extreme weather across Europe and rising demand for gas fired generation. This perfect storm is putting pressure on European gas storage levels, driving wholesale prices higher and increasing risk premia on prices along the curve. In this latest energy market update, Harrison Miles, TEC’s Head of Trading, examines the key factors shaping the energy market, including evolving supply and demand dynamics. Harrison also explains how TEC’s trading team has responded to the volatile market conditions to further protect members from energy price spikes this winter.

 

What is the overall outlook looking ahead to winter 2026/27?

The main theme ahead of winter is one of supply tightness, with global LNG supply down by 20% due to the closure of the Strait of Hormuz and significantly lower EU gas storage levels than normal for this time of year. It’s looking increasingly unlikely that the Strait will reopen and LNG flows resume ahead of winter. Unless we have a particularly mild and wet winter, nervousness in the market over low gas storage levels will persist, and these elevated prices will remain. Current issues surrounding the heatwaves in the UK and Europe should be resolved as lower temperatures and increased rainfall should occur during Autumn, although the impact from this summer’s conditions may still be felt in markets.

What are the key wholesale energy drivers that could impact prices this winter?

The most important driver in the wholesale markets is the geopolitical situation with US and Iran; it remains very unstable. Latest indications from the US are that they are looking to apply significant economic pressure on Iran through a sweeping range of sanctions and measures, indicating the disruption from the conflict and closure of the Strait of Hormuz will continue for some time. In the last week or so, strikes have resumed between the US and Iran, with the rhetoric ramping up further too. This has pushed prices higher in recent days, with increased fears of further escalation from one or both sides in an effort to break the deadlock.

 

Additional risk factors have also emerged this summer, following the sustained heat and drought conditions in the UK and Europe and the associated curtailments of nuclear and coal power generation due to low river levels and high river temperatures.

The subsequent increase in gas-fired power generation to compensate for these issues has pushed short term prices up to parity with winter prices. This has reduced the profitability of utilising gas storage; as a result, gas inventories are at 18 year lows for the time of year, lagging significantly behind levels we would typically see.

 

How serious is the issue of gas storage going into winter?

It is very unlikely that we will deplete gas storage inventories fully over winter, but they will continue to have a significant influence over wholesale prices as we progress through the season.

In the coming weeks, it is likely UK and European gas prices will need to increase further to attract the necessary level of LNG imports to meet storage injection and gas demand requirements for winter. If we see a cold winter, storage stocks will be depleted entering 2027, which will then push prices up next year due to the increased injection requirements.

Ultimately, a cold winter or other supply disruption could see these higher prices sustained over the winter period and beyond. However, the good news for TEC members is that we have mitigated against these risks by accelerating the winter 2026, summer 2027 and winter 2027 hedging programmes, reducing the membership’s exposure to this price volatility.

 

How are non-commodity charges continuing to affect members, and how can they mitigate them?

Non-commodity charges continue to rise, year on year.  Whilst some of these costs are fixed and unavoidable, in the form of standing charges, others are volumetric and charged on a time of use basis. These time of use costs are at their highest between 4-7pm on weekdays, therefore reducing consumption at these peak times will significantly reduce costs. As an example, during working days between November to February, the cost of electricity between 4-7pm can be 280% more expensive than off peak. By shifting your demand, there is a real opportunity to reduce your energy bill. TEC has two upcoming webinar sessions to explore and discuss this topic further with the membership.

 

How is TEC helping protect its members from price volatility in winter 2026/27 and beyond?

TEC accelerated the hedging programme for winter 2026 and summer 2027 at the start of the conflict back in March, protecting the membership from recent price volatility.

 

As additional risks have emerged over the summer and the conflict remains unresolved, prices are beginning to rise further along the curve. To protect against price volatility extending into winter 2027 and beyond, we accelerated our position and are significantly ahead of the programme for both winter 2027 gas and  power. Your latest gas and power positions can be found here.

 

In particular, accelerating the winter 2027 programme increases the likelihood that we will be able to achieve lower commodity costs for this period compared to those of winter 2026, despite the significant volatility and price increases we have seen in recent weeks.

 

We will continue to monitor developments in the market with a particular focus on winter 2027, taking further action if deemed prudent and advantageous to our members.

 

TEC’s ‘Time of Use Charges for Electricity’ resource paper is available in the Members Area.

 

Our next ‘Reducing Time of Use Charges Discussion and Q & A‘ webinar takes place on October 1^st.  Get in touch with your MSA to register.