September 2025 UK Energy Market Drivers

27/10/25

September 2025 was a month of cautious trading with moderate price fluctuations in the UK energy market. The average daily price change was slightly negative, reflecting a generally bearish tone throughout the month. Despite intermittent bullish signals, such as geopolitical tensions and colder weather forecasts, the market settled into a narrow trading range by the end of the month. Traders appeared to adopt a wait-and-see approach, focusing on winter readiness and monitoring global LNG dynamics closely.

Supply Factors

Supply conditions throughout September were relatively stable and supportive of lower prices. European gas storage levels steadily increased, reaching 83% by the end of the month, which provided a strong buffer ahead of the heating season. In the UK, LNG imports and storage remained robust, consistently outperforming the same period last year. This reinforced short-to-medium-term supply security and helped offset concerns about potential disruptions. Norwegian gas flows were initially constrained due to maintenance, but production began ramping up by the 22^nd, signaling the end of seasonal cuts. Although there were strikes at French LNG terminals and a drone sighting near Equinor’s Sleipner fields in the North Sea, these events did not result in significant supply interruptions.

Demand Factors

Demand-side dynamics were shaped largely by seasonal expectations and weather developments. As the heating season approached, traders became increasingly sensitive to colder weather forecasts, particularly in the latter half of the month. These forecasts added uncertainty to supply-demand balances and contributed to short-term price movements. Industrial demand across Europe remained subdued, which helped suppress any major price spikes despite geopolitical and weather-related pressures. Meanwhile, the potential for increased LNG demand from Asia loomed over the market, with traders watching closely for signs of cargo rerouting that could tighten European supply.

Geopolitical Factors

Geopolitical developments continued to exert a strong influence on market sentiment. The ongoing conflict between Russia and Ukraine remained a central concern, with traders reacting to potential sanctions from the US and EU. Tensions in the Middle East, including Israel’s actions in Qatar and drone sightings near critical infrastructure, added layers of uncertainty. US President Donald Trump’s statements on NATO and energy policy stirred speculation, particularly his suggestion that NATO countries should shoot down Russian aircraft violating airspace. However, these remarks had limited immediate impact on market fundamentals. The EU also floated proposals to accelerate the phase-out of Russian fossil fuels, which could reshape long-term supply dynamics and influence future trading strategies.

Power Generation Factors

The UK’s power generation mix in September was heavily influenced by weather patterns, as persistent Atlantic winds enabled wind power to lead the generation mix, contributing 35% and reducing the need for gas-fired generation to just 22%. Solar also performed well, reaching 7%, supported by late-summer conditions and expanded capacity, highlighting the growing role of renewables in balancing the grid and reducing fossil fuel dependency. Electricity imported from the continent remains at an elevated level (15%), helping to counter the continued decline of nuclear output – now only 10% of total generation mix. This ability to shift between generation sources helped stabilize demand and mitigate price volatility. Additionally, storage technologies reached a record 2% share, reflecting growing grid flexibility and investment in battery infrastructure. The UK’s Emissions Trading Scheme (UKETS) price continued its summer climb, peaking at £58/tonne mid-month.