UK Gas & Electricity Market Overview – May 2025

24/06/25

May 2025 was a month of contrasts in the UK energy market. While the overall tone was one of easing prices and improving supply conditions, the underlying data tells a more nuanced story—one of volatility, strategic repositioning, and geopolitical tension.

Gas prices fluctuated daily, with movements ranging from a 2.48% drop to a 3.93% rise, averaging a modest +0.41%. Electricity prices followed a similar trajectory, reflecting the interplay between weather, supply disruptions, and global market sentiment.

Supply Factors – Stability with Shadows

The supply side of the market was marked by a tug-of-war between recovery and risk. Norwegian gas flows—a cornerstone of UK and European supply—were repeatedly disrupted by planned maintenance and unexpected outages. These interruptions created short-term anxiety, especially as Europe’s gas storage levels remained below seasonal norms.

By month-end, EU storage had climbed from 39% to 47%, still trailing the five-year average. Traders responded by shifting focus to winter contracts, signaling concern about long-term supply security.

Demand Factors: Weather and Sentiment Collide

Demand was shaped by a mix of meteorological and macroeconomic forces. Early May brought colder-than-average temperatures, increasing heating demand and pushing prices upward. But as the month progressed, milder conditions and improved wind generation helped ease pressure on both the gas and electricity grid.

Economic sentiment also played a role. A temporary easing of tariffs between the US and China boosted global confidence, lifting short- and long-term energy demand expectations. However, legal challenges to those tariffs later in the month reintroduced uncertainty, reminding businesses of the fragile balance between policy and market behavior.

Geopolitical Factors: Tensions and Turning Points

Geopolitical developments were a constant undercurrent throughout May. The Russia-Ukraine conflict remained unresolved, with President Trump’s brief involvement in peace talks sparking hope—only to withdraw days later, dampening long-term ambitions of resumed Russian gas flows into Europe.

Meanwhile, China’s shifting LNG purchasing strategy—moving toward spot market acquisitions—raised concerns about increased competition for cargoes. This dynamic could strain European supply chains, especially as Asian demand rises during the summer.

These events didn’t just influence prices, they reshaped trader behavior, with many prioritizing winter contingencies over short-term gains.

Power Generation: A Cleaner, More Variable Mix

May 2025 marked a significant shift in Britain’s electricity generation landscape, with zero-carbon sources delivering 57% of the total electricity mix – the highest share for May in recent years. This milestone was driven by a strong rebound in both wind – contributing 27%, and solar output – reaching 12%, helping to push carbon intensity down to 106 gCO?/kWh, a 15% year-on-year reduction.

Gas-fired generation (CCGT) fell to just 20%, its lowest May contribution in five years and half the level seen in May 2021. Imports from the continent (17%), Nuclear (15%) & Biomass (7%) all remained stable in line with previous months. The UK’s Emissions Trading Scheme (UKETS) price continued on its sharp upward trend that had been started in March, breaking the £50/tonne for the first time in 12-months.