Power Prices Continue to Follow Gas and Carbon
The Carbon Chain:
How Gas Generation Drives the Power Market
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ENERGY CONSULTANCY OF THE YEAR 2025
Publish Date:
July 1, 2026
Power Market Correlations: Gas-Fired Generation & Carbon
UK wholesale electricity pricing operates on a marginal pricing mechanism, meaning the most expensive generator required to balance the grid sets the price.
- Gas Dependence: Gas-fired generation frequently sets this marginal cost, meaning wholesale electricity closely mirrors NBP gas curves.
- Carbon Pricing (EUA & UKA): European and UK carbon allowances (EUA) hit €90/tonne in early June 2026. Higher carbon costs push up the operational costs of gas-fired power stations, directly inflating the baseload electricity forward curve for business consumers.
Energy Market Report Q3 2026
How Can Advantage Help?
Our sustainability department continue offer an ever-increasing range of products and technology aimed at reducing energy consumption and associated costs as well as driving down carbon emissions.
We will of course continue to keep you updated around these initiatives, but please do reach out to your designated point of contact should you wish to explore your options in this regard.
In terms of procurement, we will of course continue to monitor markets with a view to helping customers navigate the unprecedented circumstances and ascertain when constitutes the best time to seek a contract extension.
Our popular flexible procurement options continue to be an option for an increasing number of clients on either a standalone basis or as part of a grouped basket. This often facilitates access today/month ahead trading markets which have proved to be particularly beneficial to many clients over the winter period.
BULLISH IN Q3
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IRAN WAR AND GEOPOLITICAL FALLOUT
COMPETITION FOR LNG
LOW EUROPEAN STORAGE
POLITICAL & ECONOMIC INSTABILITY AND UNCERTAINTY
RUSSIA/UKRAINE WAR
RANGEBOUND IN Q3
VOLITILITY & UNCERTAINTY
CARBON
STARMER RESIGNATION
BEARISH IN Q3
US-IRAN DEAL
RE-OPENING STRAIT OF HORMUZ
MILD SUMMER START
WHOLESALE FUTURES PRICES - ‘28 & BEYOND
TRUMP’S TARIFFS
GOVERNMENT RESHUFFLE
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