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GLEG UK Energy Market Update 21-09-26…
September 21, 2026
A Flexible Contract Could Be the Best Option.
Businesses with an electricity or gas contract ending before April 2027 face a difficult procurement decision.
Wholesale energy prices have risen sharply following renewed conflict in the Middle East, disruption to global shipping and continued concerns over LNG supplies. European gas storage also remains well below normal seasonal levels, increasing the market’s sensitivity to Norwegian outages, colder weather and further supply disruption.
By 11th September, UK gas was trading at approximately 6.8p/kWh, having exceeded 7.0p/kWh during the week. Winter-26 electricity had risen to approximately 16.1p/kWh, while Brent crude closed above $100/bbl.
For organisations approaching renewal, fixing their entire requirement at today’s elevated prices would provide budget certainty. However, it could also lock in a substantial short-term risk premium.
The market remains strongly backwardated
Near-term energy prices are high, but prices further along the forward curve remain materially lower. This is known as backwardation.
As of 11th September:
- Calendar-28 gas was approximately 3.2p/kWh, compared with near-term gas at approximately 6.8p/kWh.
- Calendar-28 electricity was approximately 8.2p/kWh, compared with Winter-26 electricity at approximately 16.1p/kWh.
- Gas prices for 2029 and 2030 were approximately 2.4–2.5p/kWh.
- Electricity prices for 2029 and 2030 were approximately 7.1–7.3p/kWh.
The market is therefore pricing the current disruption as a serious near-term issue rather than a permanent feature of the energy market.
Why a flexible contract could be the best option
A flexible energy contract allows a business to purchase its energy requirement in stages rather than fixing the entire contract volume on a single day.
For businesses renewing before April 2027, this could be particularly valuable. A flexible arrangement may allow an organisation to protect part of its immediate Winter-26 exposure while purchasing later periods separately at lower prices.
The potential benefits include:
- Reducing the risk of making the entire purchasing decision at an unfavourable point in the market.
- Securing energy through a series of measured purchases.
- Treating the expensive Winter-26 period separately from 2027–2030.
- Building budget certainty gradually.
- Taking advantage of lower prices further along the forward curve.
A flexible contract does not guarantee a lower overall cost. Any volume left open will remain exposed to market movements. Prices could rise further if LNG supplies deteriorate, Norwegian production falls or the Middle East conflict escalates.
The purchasing strategy must therefore reflect the organisation’s budget, appetite for risk and need for price certainty.
Should businesses wait for prices to fall?
Waiting for the market to fall can leave a business fully exposed to further increases.
Organisations with unhedged Winter-26 requirements should calculate the effect that higher prices would have on their budgets. They should also establish clear purchasing triggers and decide how much volume they are prepared to leave exposed.
For some businesses, a fixed contract will remain the right choice, particularly where complete budget certainty is the main priority. For larger energy users or organisations able to purchase energy in stages, a structured flexible contract may provide a more effective way to manage the current market.
GLEG’s view
Businesses with contracts ending before April 2027 should begin reviewing their renewal options now.
The immediate priority should be understanding and managing exposure to Winter-26. However, businesses should avoid automatically fixing several years of energy at prices heavily influenced by the current geopolitical premium.
A measured flexible strategy could allow an organisation to protect its most exposed periods, purchase longer-term requirements at lower absolute prices and retain some flexibility if market conditions improve.
GLEG can review your current energy position, compare fixed and flexible contract options and develop a purchasing strategy aligned with your budget and appetite for risk.