Wholesale prices set the price you pay for business energy. This guide explains how UK wholesale gas and electricity markets actually work, where prices are now, and what the forward curve implies for your next renewal.
How UK wholesale electricity is priced
UK wholesale electricity is set every 30 minutes by the marginal cost of the most expensive generator needed to meet demand at that moment. Three markets feed into the price:
- Forward markets (ICE, Nasdaq): monthly, quarterly and annual contracts traded years ahead.
- Day-ahead market (N2EX, EPEX SPOT): an auction held the day before delivery for each half-hour.
- Intraday and balancing: continuous trading and last-minute system balancing by National Grid ESO.
UK wholesale electricity is “marginal pricing” — the most expensive generator dispatched sets the price for everyone. Gas-fired generation usually sets the marginal price, which is why UK electricity wholesale tracks gas wholesale closely.
How UK wholesale gas is priced
UK wholesale gas is priced as NBP (National Balancing Point), the UK virtual trading hub, with prices traded forward 1-3 years out. Gas is increasingly imported from Norway via pipeline, plus LNG cargoes from the US, Qatar and others.
The 2022 energy crisis and the slow normalisation
In late summer 2022 Russia weaponised gas supply to Europe, sending UK NBP gas to over 25p/kWh and UK wholesale electricity (gas-set) to over 50p/kWh. By 2024 prices had halved, by 2026 quartered — but neither gas nor electricity has returned to the pre-2021 baseline.
UK wholesale electricity price trends 2019-2026
- 2019: ~4.5p/kWh (pre-Covid stable).
- 2020: ~3.5p/kWh (Covid demand collapse).
- 2021: ~9p/kWh (post-Covid demand recovery + gas tightness).
- 2022: ~25p/kWh (Russia/Ukraine, gas supply shock).
- 2023: ~14p/kWh (mild winter, demand destruction).
- 2024: ~11p/kWh (continued normalisation).
- 2025: ~10p/kWh.
- 2026: ~9.8p/kWh.
How wholesale prices flow through to your business bill
For a typical UK business electricity bill in 2026:
- ~38% wholesale energy.
- ~22% network charges.
- ~17% environmental and social levies.
- ~10% supplier margin and operating cost.
- ~13% VAT.
So a 5p/kWh fall in wholesale typically translates to roughly 2-2.5p/kWh fall on your retail unit rate (after the supplier hedges, retains a margin, and policy costs are recovered).
What the forward curve says about 2026-2028
Forward markets in early 2026 imply:
- 2026: wholesale electricity 9-11p/kWh; gas 3-4p/kWh.
- 2027: 8-10p/kWh; gas 3-4p/kWh.
- 2028: 7-9p/kWh; gas 3-4p/kWh.
The implied direction is gentle downward as new wind capacity, interconnectors and storage come online. Risks to the downside (warm winter, weak demand) are smaller than risks to the upside (geopolitical disruption, cold winter).
Should you fix or float in 2026?
With wholesale flat-to-falling and policy costs settled, both fixed and flexible look reasonable in 2026. As a generalisation:
- Fix 2-3 years if you value certainty and want to lock in protection from any next geopolitical shock.
- Fix 12-18 months if you believe the forward curve will out-perform and want to re-quote at lower levels next renewal.
- Flex / pass-through if you have over 1 GWh/year, internal energy expertise and want to actively trade wholesale.
Frequently Asked Questions
Roughly 9.8p/kWh on the day-ahead market in Q1 2026. Forward annual contracts for delivery in 2027 trade around 9p/kWh and for 2028 around 8p/kWh.
Because gas-fired generation usually sets the marginal price under the UK’s marginal pricing mechanism — gas plants are typically the most expensive generator needed to meet demand at any given moment. That linkage will weaken as more renewables and storage displace gas at the margin, but is still dominant in 2026.
UK wholesale gas is priced as NBP (National Balancing Point), the virtual trading hub. Prices are traded on ICE, Nasdaq and OTC markets in monthly, quarterly, seasonal and annual contracts up to 3 years forward.
Wholesale energy is roughly 38% of a typical 2026 business electricity bill. A 5p/kWh fall in wholesale typically translates to a 2-2.5p/kWh fall on your retail unit rate after supplier hedging and policy cost recovery.
Forward curves imply a gentle downward trajectory: wholesale electricity from ~10p/kWh in 2026 toward ~8p/kWh by 2028, as new wind, interconnector and storage capacity displace gas at the margin. Risks are skewed to the upside (geopolitical disruption, cold winters).
Want a quote that reflects current wholesale movements? Get a free 60-second business energy quote — refreshed hourly during market hours.
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