Energy Roundup: May 2025

Welcome to the fifth issue of our Energy Roundup. 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

At the beginning of the year, all eyes were on EU gas storage levels.  With the end of the Russia/Ukraine gas transit agreement and colder weather forecast, reliance increased on gas storage supply to meet demand.  Although there was very little concern of running out of gas stocks, being able to refill to the EU-mandated 90% fullness looked to be a challenge, with prices needing to stay high to push out some demand and attract LNG over key Asian hubs. 

This risk peaked in February, however, bearish sentiment then set in amid a mild end to winter, potential for a Russia/Ukraine peace deal and with the relaxation of the EU-mandated gas storage fill targets.  Further losses have been seen more recently amid US tariffs, lowering global demand expectations and the absence of cold weather in April.

Looking ahead, geopolitical headlines will continue to drive volatility, whilst attention will also turn to the Asian cooling season, which could drive up global LNG competition.

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

Power Market Update Webinar
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 

Thursday 24 July, 11 am
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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. 

Transmission Network Use of System (TNUoS) Updates

Transmission Network Use of System (TNUoS) charges are designed to allow transmission network companies to recover their operating costs from suppliers and generators. There are different elements to the charges, but the vast majority of supplier cost is recovered via a £/site/day structure that feeds through into customer standing charges.

On Friday 31^st January, NESO published final tariffs for the 2025/26 year. Changes to tariffs will vary by site, but the overall picture was a year-on-year increase in TNUoS charges of just over 20%. With significant investment from Transmission companies needed to fund large infrastructure projects, increasing TNUoS charges in future years are likely. This infrastructure is needed to deliver a Net Zero energy system by increasing the capacity to transport low-carbon electricity from where it is generated to where it is consumed.

Looking further ahead, TNUoS charges are controlled by Ofgem via a series of 5-year price controls, with the third price control period (RIIO-T3) starting in Apr-26. The transmission network companies published their draft business plans in December, which indicate they are asking Ofgem to be allowed to recover a lot more money than they have previously. On 30^th April, NESO published an initial forecast of TNUoS charges in the Apr-26 year following calls from the industry for greater clarity. The main headline is that total demand residual revenues, which lead to the majority of TNUoS charges, are forecasted to increase by a further 26% from Apr-25 to Apr-26. These increases on TNUoS remain uncertain and depend on several factors, including what Ofgem decide to approve, but a significant increase from Apr-26 looks very likely.

Capacity Market Supplier Charge (CMSC) Updates

The Capacity Market Supplier Charge (CMSC) pays for the costs of providing agreements to pay for generation to be available at times of peak national demand, with these agreements won by generators through an auction process. This enables flexible generation to earn extra revenues and secure investment to be built and remain operational, so that if there is a shortage of generation at times of high demand, they can be called upon to provide the extra generation needed to enable everyone to continue consuming electricity. The payments to these generators are funded via the CMSC, which charges suppliers a £/MWh rate on the volume they supply between 4pm and 7pm on working days from November to February. Suppliers then recover this cost through customer bills.

In March, the T-1 (for delivery next Winter) and T-4 (for delivery in the Winter of 2028/29) auctions happened to procure capacity for future Winters. The T-1 auction, which acts as a top-up to the earlier T-4 auction, procured around 7.9GW of capacity at a clearing price of £20/kW. This adds slightly less cost to the 2025/26 Winter than we expected, so will mean a slightly lower cost forecast for this winter than previously. The T-4 auction for 2028/29 procured around 43GW of capacity at a clearing price of £60/kW. This means an auction cost of around £2.6bn at current price levels, which is similar to the past couple of T-4 auctions and means a continuation of the higher Capacity Market charges we will see from next year.

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

Monitor (NECs explained) Webinar
Join us as we dive deeper into Monitor, our 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 21 May, 2 pm
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Energy in the news

Ofgem’s Decision on Connections Reform Package (TM04+)

Ofgem CEO Jonathan Brearley made the keynote State of the Market address at the Energy Networks Association on 15 April 2025.

He announced Ofgem’s decision to approve the National Energy System Operator’s (‘NESO’) package of reforms of the electricity connection process (known as TMO4+).  The reforms are designed to accelerate the rate of connections to the transmission system, to enable delivery of the government’s Clean Power 2030 Action Plan.

Projects in the connection queue are currently prioritised based on ‘first come, first served’, following the reforms, those projects ‘ready’ and ‘needed’ will be prioritised.  It is expected that the first projects to benefit from the reforms will be connected and operational from 2026. 

Moving to the wholesale market, Jonathan made clear that as the landscape transforms from a fossil fuel-based system to one in future dominated by renewables, changes are required.  Whether that be through zonal pricing or a reformed national market, either will bring large-scale changes in the next few years.

We wait to hear the decision from the government, expected this Summer.  Whichever way it goes, we will be here to help guide customers through what it means for them.

You can read Jonathan Brearley’s full speech here

UK Government Pledges £300M to Boost Offshore Wind Supply Chain

The UK government has announced a £300 million investment through Great British Energy to enhance domestic offshore wind supply chains. This funding aims to support the manufacturing of key components like floating platforms and cables, stimulate private investment, and create thousands of jobs, particularly in industrial regions. The initiative is part of a broader £8.3 billion commitment to clean energy and aligns with the UK's goal of achieving clean power by 2030. Applications for grants are expected to open by the end of the year.

A view on onsite solar from our net zero solutions partner, SAS Energy

In this short video, EDF Business Solutions introduces Robert Murphy, Sales and Origination Director at SAS Energy - part of the EDF Group, who shares expert insights into the wide ranging benefits of solar energy. From reducing Scope 1 emissions to delivering significant cost savings, solar offers a smart solution for businesses. Whether it’s rooftop installations, carports, or ground mounts, whatever space your business occupies, we’ve got you covered.