Our regular blogs outlining the direction of the energy market and drivers behind those trends has moved onto the NFU Energy website, see February – March catchup here: February stability gives way to march volatility | NFU Energy.
This article instead looks at a retrospective of the last quarter, focusing on the data and what can be done to mitigate costs.
Energy Supply
To understand why the UK energy market is so volatile, it’s helpful to look at our energy supply. An overview of the electricity mix is shown below:
Renewables (mainly wind, 31% of total supply) make up the largest proportion of our grid supply, followed by fossil fuel (mainly natural gas, 30% of total supply), nuclear power, and finally electricity import. A small proportion of our total supply is exported through our interconnectors.
In terms of energy pricing, the largest issue with having a large proportion of power coming from renewables is intermittency and unreliability of generation, particularly relevant with wind power. When wind generators are operational, intraday prices will often drop to zero or even go negative. Conversely, when wind generators are not operational the shortfall must be made up by gas peaking plants, spiking prices.
Throughout 2025, the UK domestically produced between 33-44% of its own natural gas demand, relying on imports for the remainder through either interconnectors or Liquid Natural Gas (LNG) shipments.
With imports making up around 2/3 of our gas supply, and gas being the second highest electricity generation source, the UK is at the mercy of global geopolitical events and fluctuations in foreign energy markets.
Pricing
As outlined in NFU Energy’s blog, events in the middle east have affected markets both through speculation and physical means of disrupted gas shipping routes. Weather also had some big variation, from unseasonably warm to cold and windy.
Below is a frequency distribution of the intraday electricity price in Q1 2026:
January and February were very similar, with the most frequent pricing occurring between £80-120/MWh and limited spread, although January saw the most frequent peak pricing at >£250/MWh. March however skewed higher with high frequency in the £100-160/MWh bands, as well as frequently spread lower in the £0-40/MWh bands.
More detailed electricity and gas price tracking is shown below:
Intraday prices have greater swings than day-ahead to make up for the half-hourly grid supply & demand, peaking at £750/MWh in early January and troughing at -£52/MWh in mid-March. The most notable trend is clearly gas cost, which spiked in early March from around £30/MWh (85p/th) to £45/MWh (130p/th). Electricity prices then swung between higher and lower than the previous months in the quarter, balancing between high gas price and good renewable generation. So far in April, gas prices have recovered slightly, hovering around £40/MWh (115p/th).
What does this mean?
As usual, these price swings presented an opportunity for growers who operate CHP. Although gas prices spiked, there has often been at least two strong price peaks per day throughout March, as well as some great overnight prices, which can be targeted for export power. Keeping on top of your CHP operation schedule and making daily trades puts you in a much better position to take advantage of these kinds of volatile markets. As well, locking in some long-term export trades whilst prices are high guarantees a level of profit for later seasons.
For those without self-generation, the opportunities are more limited. January and February saw relatively good long-term prices for fixing import, compared with the rest of the winter season. Holding off on making import trades can be a good idea when geopolitical events occur. However, there is never a guarantee that the markets will recover or when the next event will occur. My advice is to look at long-term trading as cost security rather than cost saving, but to keep an eye out for short-term spikes and troughs to capitalise on.
Finally, reducing reliance on grid power is the best way to mitigate a volatile market. Energy efficiency, self-generation, and alternative heat sources are all opportunities to consider.
If you want some advice on your contract, trading, or further consultancy on how to reduce your costs, contact us at growsave@nfuenergy.co.uk.
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