The Energy Market in 2026: How It Compares to the Crisis Years

UK wholesale gas averaged approximately 45p/therm in 2019. It averaged over 200p/therm across 2022. In January 2026, it is trading in the 75–90p/therm range. The market has travelled from pre-crisis normality through an unprecedented shock and into a new equilibrium that is materially higher than what came before but dramatically lower than the peak. Understanding where 2026 sits in that arc — and what it means going forward — is the foundation for any serious energy procurement decision this year.

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The crisis in numbers

The 2021–22 energy crisis was not a single event but a sequence of compounding factors over approximately 18 months. UK gas spot prices, which had traded in a 30–60p/therm range for most of the preceding decade, began rising in mid-2021 as European storage entered the injection season at unusually low levels. By October 2021, gas was trading above 200p/therm. By December 2021, brief spot excursions above 400p/therm were recorded. The invasion of Ukraine in February 2022 removed any remaining prospect of Russian gas supply normalisation and drove a second wave that pushed Q2 2022 forward contracts above 300p/therm for gas and electricity prices above £400/MWh in the day-ahead market.

The corporate and SME energy market absorbed these prices in two ways. Businesses on fixed contracts — particularly those with 2–3 years remaining — were protected and saw nothing on their bills until renewal. Businesses on flexible contracts, pass-through arrangements, or out-of-contract tariffs saw the full spike in real time. The divergence in outcomes between these two groups through 2022 was the starkest demonstration in modern UK energy market history of what contract structure actually means in practice.

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How 2026 differs structurally from the crisis years

The 2026 market is lower in price but higher in structural risk than the 2019 market. The specific risks that made the 2021–22 crisis possible — LNG supply dependency, geopolitical exposure through Strait of Hormuz and Red Sea shipping, European storage fill pressure after the loss of Russian gas — are all present in 2026. What is absent is the acute acute scarcity that drove the initial price spike. European storage entered 2026 at adequate rather than abundant levels. LNG supply has grown as US export capacity has expanded. The global gas market is tighter than pre-2022 but not in the supply emergency that characterised 2022.

Electricity pricing has been additionally moderated by the step-change in UK renewable capacity since 2022. Offshore wind additions in 2023–25 have reduced the proportion of time that gas-fired generation sets the marginal electricity price. High-wind periods increasingly produce wholesale electricity in the £50–70/MWh range that would have been the floor in crisis conditions. The problem is that these periods are intermittent, and the Dunkelflaute risk — extended low-wind cold periods in winter — remains as acute as ever, with gas-fired backup still setting prices at £150–200/MWh on the worst system stress days.

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What has not changed

Three things about the UK energy market have not changed since the crisis, and are unlikely to change for the foreseeable future. First, the UK’s structural dependence on LNG imports. North Sea gas output continues to decline, and LNG now represents 25–30% of supply. Global LNG market competition, particularly from Asian buyers, means UK prices are influenced by weather in Tokyo and industrial demand in Seoul in ways that were marginal before 2022 but are now routine. Second, the non-commodity cost burden. The Capacity Market levy, CfD Supplier Obligation Levy, network charges, and BSUoS collectively represent 40–55% of an electricity bill. These have grown through the transition and show no sign of reducing — they are the cost of the infrastructure investment required to integrate renewables and maintain system resilience. Third, the volatility. Markets that were quiet for years have learned what geopolitical risk events do to UK prices, and they price that risk into forward contracts even in stable periods. The 2026 forward market embeds a risk premium that reflects the possibility of a supply shock; that premium doesn’t disappear until the structural supply dependencies that create the risk are reduced.

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The procurement connection

The comparison between the crisis years and 2026 produces a clear procurement implication: prices are better now than they were, but not safe to ignore. The businesses that used the crisis to build genuine energy management discipline — procurement processes, consumption monitoring, supplier relationship management — are better placed in 2026 than those that treated the crisis as a period to endure and then return to passive management. Telnergy’s advice for 2026 is consistent with what it was in 2019 and 2022: active procurement, competitive tendering, contract structures matched to your consumption profile and risk tolerance, and renewal managed ahead of the deadline rather than in response to it.

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FAQ

Are current energy prices the new normal or a temporary level before further falls? The structural conditions supporting pre-2021 prices — cheap Russian gas, high North Sea output, minimal LNG dependency — have changed permanently or for a very long period. The current 75–90p/therm gas and 18–22p/kWh electricity environment is the realistic baseline against which procurement and efficiency decisions should be made. Further falls are possible if global LNG supply grows faster than demand, but planning budgets around that scenario creates financial exposure if it doesn’t materialise.

My board has asked whether we should lock in a long-term contract or stay flexible. What’s the right frame for that decision? The question is what your business can absorb if it’s wrong. A fixed contract that proves to be 5–10% above market over its term costs a defined, bounded amount. Being unhedged through a supply shock — which the 2022 experience demonstrates can produce a 300–500% price move — costs an unbounded amount that may be existential for a margin-sensitive business. For most SMEs, the asymmetry of outcomes strongly favours fixing at competitive rates when the market is at a reasonable level.

We managed energy badly through the crisis and it cost us significantly. How do we avoid a repeat? Three changes make the biggest difference. First, own the renewal calendar — know when every contract expires, what the notice period is, and start the tender process six months before expiry rather than six weeks. Second, benchmark against the market at least annually rather than accepting incumbent renewal offers as the starting point. Third, monitor consumption against contracted rates quarterly — billing errors and profile drift are invisible without regular checks. Telnergy can run all three as an ongoing service rather than a one-off event.