What We Got Right (And Wrong) in Our 2023 Market Predictions

In early 2023, Telnergy published a market commentary for clients setting out our expectations for UK energy prices over the following two to three years. Three years on, it is worth reviewing that commentary honestly — what we called correctly, what we got wrong, and what the gap between prediction and outcome reveals about the limits of market forecasting and the procurement approach that holds up regardless of where prices go.

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What we got right

The structural case for elevated prices persisting beyond the immediate crisis proved correct. In early 2023, a common view in the market — and one that some brokers were communicating to clients — was that the 2022 crisis was a temporary dislocation and that prices would return toward pre-crisis levels within 12–18 months as European storage normalised and LNG supply recovered. We were sceptical of this view. Our position was that the loss of Russian pipeline gas had created a permanent structural shift in European supply economics, that the UK’s resulting LNG dependency introduced a risk premium that wouldn’t disappear even in a well-supplied market, and that businesses planning budgets on a return to 2019 prices were creating financial exposure.

Three years later, that call has proven accurate. UK gas has not returned to pre-crisis levels. The structural factors we identified — increased LNG dependency, Norwegian supply at capacity, geopolitical risk premium, non-commodity charge growth — are all present in the 2026 market. Businesses that built 2023 and 2024 budgets assuming a return to £40/MWh electricity faced significant variance against those budgets when actual procurement costs landed at 18–22p/kWh.

We also called the timing of the 2022–23 price peak correctly for most of our client base. The advice to fix contracts in H2 2022 for clients approaching renewal — despite the uncomfortable unit rates — rather than wait for prices to fall, protected those businesses from the 2023 price volatility that caught clients who held out for better rates before renewing.

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What we got wrong

Our 2023 outlook underestimated the speed of the price correction through 2023 and into 2024. We anticipated a sustained period of 150–200p/therm gas through 2023, with a gradual easing into 2024. The actual correction was faster — gas prices fell below 100p/therm in summer 2023 and continued easing into 2024. The primary driver of this faster-than-expected correction was the speed at which European buyers and utilities adjusted consumption, the acceleration of US LNG export capacity additions, and two consecutive milder-than-forecast winters in 2022–23 and 2023–24 that reduced storage draw-down below modelled levels.

This matters not as a confession but as calibration. The rate and timing of price moves in a volatile market is genuinely difficult to forecast with precision. We were directionally correct on the structural level but too conservative on the timeline of the correction. Businesses that took our 2023 market view and fixed for 24 months at rates that looked reasonable in 2023 but proved to be above the 2024–25 market incurred an opportunity cost. That opportunity cost was smaller than the cost of having been unhedged through the 2022 spike — but it was real.

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What the scorecard reveals about market timing

The most important conclusion from reviewing our 2023 predictions against 2026 reality is not about our specific calls — it is about what market forecasting can and cannot deliver for procurement decision-making. Structural analysis of supply fundamentals, demand trends, and geopolitical risk is useful: it correctly identifies directional risk and the scenarios that procurement strategy should account for. Precise price level and timing prediction is not reliably achievable: the 2022–26 period has been characterised by weather events, geopolitical developments, and policy changes that materially shifted supply-demand balances in ways that no model consistently anticipates.

The procurement approach that this implies is not “try to call the market with more precision” but “build a process that produces good outcomes across a range of market scenarios.” Fixed contracts at competitive rates, renewed with adequate lead time, on contract lengths matched to your business’s risk tolerance — this approach doesn’t require correct market forecasting. It requires discipline, a competitive tender process, and consistent execution of the renewal timeline.

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The procurement connection

The lesson Telnergy takes from the 2023–26 market review is the same lesson that 24 years of UK commercial energy market experience consistently produces: the clients who have fared best over the long term are not those who called the market correctly in any given period. They are those who maintained a consistent procurement process — competitive tendering, managed renewal timelines, consumption monitoring, and contract structures matched to their operational profile. The market will continue to produce surprises. A disciplined process absorbs those surprises better than a reactive approach that tries to time them.

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FAQ

How much weight should I give to an energy broker’s market forecast when making procurement decisions? Use it as one input to scenario planning, not as a precision guide to timing. A broker who presents a market forecast with confident specific price targets is overstating what is knowable. A broker who presents a range of scenarios with the structural factors driving each, and recommends a contract structure that performs reasonably across the range, is giving you actionable advice. The difference between these two approaches is significant, and it’s worth asking your broker directly: what is the downside scenario, what does it produce for your cost, and how does the recommended contract structure limit that exposure?

Our broker said prices would fall significantly in 2025 and advised us to hold off renewing. They didn’t fall as much as forecast and we’ve now auto-renewed. What recourse do we have? This depends on what was communicated in writing and whether the broker’s advice included a clear statement of the downside risk of waiting. If the broker presented market timing advice without documenting the risk of the recommendation, that is a professional conduct issue under the TPI Code of Practice. Telnergy can review what happened and advise on whether a formal complaint is warranted. Regardless of recourse, the immediate priority is exiting the auto-renewal position as efficiently as possible — calculating the exit fee and comparing it against current market rates to determine whether switching now or waiting for the next renewal window is the better outcome.

What’s the most useful thing a business can benchmark its procurement performance against? Two things: the market rate for your profile at the time you contracted, and your rate against comparable businesses in your sector. The first measures execution quality — did your tender process produce the best available rate? The second measures relative cost competitiveness — are your energy costs a competitive advantage or a drag? Telnergy provides both benchmarks as part of every contract review. If you’ve never had your contracted rate compared against what a competitive tender would have produced at the same time, that comparison is illuminating.