February 2025 saw some significant movements in the UK energy markets and was definitely a game of two halves. Momentum in the market continued into the start of February, driven by low temperatures and poor renewable generation volumes. Then a downward correction gripped both gas and power contracts from the 13th of February.
The market was turned by the Trump / Putin “lengthy and highly productive” phone call. This was the inflection point. Improved wind speeds and milder temperatures also eased pressure on supply. Revised lower wind forecasts at the end of the month reversed some losses, but milder temperatures kept markets largely rangebound.
Geopolitical developments are a key focus of the market, with ongoing talks of a peace deal between Russia and Ukraine weighing down on prices. That said, recent developments between President Zelensky and President Trump leaves the market uncertain over the next steps.
The overall supply/demand outlook is easier going into March, though geopolitical uncertainty could drive volatility and see significant gains or losses during this time.
Power
Seasonal contracts for baseload power rallied to £106 and £108 for S25 and W25, respectively, before registering significant losses thereafter. Bearish sentiment driven by strong wind generation and lower domestic demand.
REGO markets continued to fall, trading at ~£1.75 /MWh for wind, solar and hydro (CP24).
| Contract
(Baseload power) |
Closing Price, 28th February 2025 (/MWh) | Month Movement |
| Summer 25 | £84.37 | -14.7% |
| Winter 25 | £91.89 | -7.2% |
Movement over 1 year, S25 and W25
Gas
Gas contracts have also been bearish. Despite low storage levels (22% in the UK), robust LNG supply, along with warmer temperatures forecast reduced gas-for-power demand. However, last week saw several LNG cargoes diverted away from the UK to Asia. In the EU, many countries have called for a reassessment of the current replenishment targets (90% by November), though currently these remain unchanged. Markets will need to rally to compete with Asian markets, to maintain LNG cargo deliveries and replenish storage. Uncertainty over Russia/Ukraine tensions impact global gas supply expectations and will likely drive the market short-term.
Looking ahead
Geopolitics are going through the biggest change in 80 years. The world order is being shaken, disrupting the old supply and demand dynamic.
Bearish signals remain in the long-term outlook, as demand stabilises as warmer forecasts into spring and increased renewable generation supports supply.
That said, gas storage in the UK and Europe is critically low; it is likely prices may have to rise again to compete with Asia for LNG cargoes.
The US continue to threaten the rest of the world with tariffs, influencing economic growth factors and trade of LNG cargoes globally. There was growing optimism that Russia and Ukraine will end their conflict, supporting supply futures, though the outcome is yet to be decided and leaves the market sensitive to this.
Ofgem Announcements: April 2025 – March 2026
Please note that Ofgem have confirmed the FIT RPI increase for Apr25 is 3.5%.
The ROC Buyout price for 2025-26 has been published by Ofgem at £67.06/ROC.
The Greenspan Agency produce this report on a best endeavours basis, and it has been supplied for your interest; the facts in this report should not be relied upon for decision making. If you have any queries about the content in this report, please contact bureau@greenspanenergy.com
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