Energy Roundup: February 2025

Welcome to the first issue of our Energy Roundup for 2025. Each quarter, we’ll bring you all the latest news, views and insights to help you navigate the ever-changing complexities of the energy industry. 
 

Energy Overview 

UK power and gas markets

This year, the wholesale energy market has seen significant volatility, with the end of the Russia-Ukraine Transit agreement casting more uncertainty on an already tight gas market.  Cooler temperatures and lower wind levels across Europe have led to a big dip in gas storage, which is now around 53% full (as of February 1st) and 16% lower than last year. 

Although it’s very unlikely that the EU will run out of gas this year (unless something unexpected happens), refilling stocks to the regulated 90% level ready for winter 2025 remains a challenge. Earlier this winter, LNG (Liquified Natural Gas) deliveries to Europe were lower than usual, but with recent price shifts, we’re now seeing more cargoes being redirected from Asia.

Looking ahead, weather and LNG competition will be key factors to watch, and as always, the market could react to any geopolitical headlines.

For more information, sign up for our Power Market Updates webinar.

Power Market Updates

Join James Chaplin, Senior Manager of Curve Trading, at our next power market updates webinar, to navigate current developments in the UK power market and get an outlook on future prices.

Wednesday 30 April, 2 pm

Register here

A brief outlook of non-energy costs

While energy costs are fairly straightforward, non-energy costs can be more complex. They include various government and third-party charges to cover the cost of transporting your energy.

Balancing Services Use of System (BSUoS) Updates

Balancing Services Use of System (BSUoS) charges pay for the actions that the National Energy System Operator (NESO) has to take to constantly match electricity generated and consumed and manage capacity constraints on the transmission network. The cost of paying generators, flexible assets, and consumers to turn up or turn down generation or consumption is charged to suppliers and recovered from consumers via BSUoS.

In late December, NESO published the final rate for Winter 2025 (October 2025 to March 2026) as £15.69/MWh. This is a £3.70/MWh increase from their initial estimate at the end of July, meaning NESO expects to pay around £550 million more.

A lot of this impact is driven by an increase in how much NESO expect to under-recover from the tariffs they have already set for the current period and over the summer, as well as an increase in their internal costs.

It is also important to remember that although these rates are called “final”, NESO can raise them if their costs turn out to be much higher. Keep an eye out for further updates from us.

Transmission Network Use of System (TNUoS) Updates

Transmission Network Use of System (TNUoS) charges help transmission companies recover their costs from energy suppliers and generators. Most supplier costs are covered through a daily fee per site, which is passed on to customers as part of their standing charges.

In late November, the National Energy System Operator (NESO) released draft tariffs for the 2025/26 charging year, starting in April. On January 31st, NESO published the final tariffs. While changes will vary by location, overall, total TNUoS revenue is set to decrease by around £170 million. This means our forecast ofTNUoS charges has decreased by about £0.60/MWh, though most of this reduction will show up in standing charges.

Looking further ahead, TNUoS charges are regulated by Ofgem in five-year price controls, with the next period (RIIO-T3) starting in April 2026. Transmission companies shared their draft business plans in December, requesting significantly more funding than before. This increase is mainly to support major infrastructure projects needed for a Net Zero energy system, improving the ability to transport low-carbon electricity. The exact impact on TNUoS charges is still uncertain and depends on Ofgem’s decisions, but a substantial increase from April 2026 is likely.

For more information, sign up for our next Monitor webinar.

Monitor (NECs explained)

Join us as we take a deeper dive into our first Monitor 2025, the quarterly report covering non-energy costs. In this webinar, our experts will share more detailed updates on how the current non-energy costs impact businesses.

Wednesday 19 February, 10 am

Register here

Energy in the news

This past quarter, we have seen many regulatory changes in the energy sector. Here are our top three:

Clean Power 2030 Action Plan

On December 13, 2024, the government published its Clean Power 2030 Action Plan, reaffirming its goal of achieving a clean power system by 2030. This target defined Clean Power as limiting unabated gas generation to no more than 5% of GB electricity generation, ensuring total clean power generation volumes matches or exceeds GB consumption, and reducing power sector CO2 emissions to below 50gCO2/kWh (down from approximately 125gCO2/kWh in 2024). Achieving this goal presents a significant challenge, requiring rapid expansion of clean energy, energy storage, and grid infrastructure. To accelerate progress, the government aims to remove barriers to planning and grid connections. 

REMA (Review of Electricity Market Arrangements)

In its Autumn update on REMA, the government provided an update on its ongoing review of Great Britain’s electricity market following a consultation earlier in 2024.

REMA is considering whether changes to market arrangements are needed in light of the changing nature of the electricity system, in particular the large growth of renewable generation. Businesses with high electricity use should be aware of these potential changes.

One key decision under consideration is whether to switch to zonal pricing, where wholesale electricity prices would vary by region, or to retain a reformed national market. Zonal pricing would be a significant and complex shift affecting generators, suppliers, customers, and traders and would take many years to implement. Additionally, reforms to the Balancing Mechanism and the Contracts for Difference Scheme are being explored. The government plans to make key decisions by summer 2025, so stay tuned for further updates.

DESNZ Updates
The Department for Energy Security and Net Zero is hosting online sessions on the Review of Electricity Market Arrangements (REMA) to shape the future of Great Britain’s electricity market.

For generators & investors 
Covers pricing models, zonal pricing, and legacy arrangements.
10 Feb (2-4 pm)

For consumers & industries 
Focuses on pricing, shielding options & impacts.
7 Feb (2-4 pm) or 12 Feb (10am-12 pm)

For information on joining these events, email: remamailbox@energysecurity.gov.uk

Small Business Threshold

On December 19, 2024, the government introduced a new definition for a “Small Business”.

Your business is classified as a Small Business if it has fewer than 50 full-time equivalent employees and either a turnover of no more than £6.5 million or a balance sheet total of no more than £5 million. Additionally, businesses qualify if they use no more than 200,000 kWh of electricity or 500,000 kWh of gas annually.

On the same day, Ofgem introduced new obligations for energy suppliers, requiring them to direct Small Business consumers to Citizens Advice services and apply Complaints Handling Standards, including access to the Energy Ombudsman for dispute resolution.

A view from our Net Zero Policy and Strategy experts

This recorded webinar includes reflections and projections from across the strategy & policy landscape, from 2024 in review to a 2025 outlook for prices. EDF Business Solutions host, Eloise Ogden, was joined by EDF experts Daniel Alchin, Head of Customers, Net Zero Policy and Strategy and Roy Collins, Policy Manager, Net Zero Policy and Strategy