French Power Pressure Crosses the Channel

30th July 2026

UK gas and power prices moved higher across most forward contracts this week, with the US-Iran conflict remaining the main market driver. Another key development was the rise in French power prices, which fed through to the UK as extreme heat threatened nuclear output and increased France’s need for imported electricity. Tighter LNG competition and weaker wind expectations added to the pressure, keeping the wider curve firm and increasing reliance on gas-fired generation.

Forward prices move higher

Gas prices increased across almost the entire forward curve, but the strongest gains were concentrated in the nearer-term contracts. August 2026 rose by 11.07% week on week, September 2026 by 11.35%, and Winter 2026 by 10.25%.

Further along the curve, the increases were more moderate. Summer 2027 gained 8.17% and Winter 2027 rose 7.70%. By Summer 2031, the increase had slowed to 0.96%, while Summer 2032 fell by 0.90%.

Power showed the same broad pattern. August 2026 increased by 10.25% week on week, September 2026 by 10.62%, and Winter 2026 by 8.12%. Longer-dated contracts moved less sharply, with Winter 2027 up 6.52%, Winter 2030 up 2.83%, and Summer 2032 up 1.25%.

Day-ahead power was the clear exception, falling by 21.20% week on week. However, taken together, the curve points to greater pressure across nearer delivery periods, while longer-dated contracts remain comparatively favourable for businesses considering future cover.

Heat raises gas-fired generation demand

Below-normal wind generation is forecast for August, which is likely to increase the UK’s reliance on gas-fired power stations. At the same time, another European heatwave is expected to raise air-conditioning demand and reduce the availability of other forms of generation.

High temperatures can restrict French nuclear output and disrupt coal transport to German power stations. Together, these pressures can increase gas demand for power generation at a time when European storage levels remain low for the season at 55.35%.

Competition for LNG adds to that pressure. Asia is trading at a $2/mmbtu premium to the UK, while less than half of total US LNG exports in June went to Europe, a 22% year-on-year decline. If global demand strengthens, Europe may need to pay more to attract cargoes, leaving less gas available for storage injections.

These pressures are unchanged from last week and are keeping Europe exposed to higher LNG costs and slower storage injections ahead of winter.

France’s influence on the UK power market

UK power prices cannot be viewed in isolation. Electricity moves between the UK and France through interconnectors, generally flowing towards the higher-priced market.

During heatwaves, warmer river temperatures and lower river levels can restrict the cooling of French nuclear plants, reducing generation. If French nuclear output falls while electricity demand rises, France may need to import more power. Increased exports from the UK reduce domestic availability and can push UK prices higher.

This relationship helps explain why increases in French power have also pulled UK contracts upwards. The markets will not always move together, particularly when UK wind generation is strong or interconnector capacity is limited, but French nuclear availability remains an important risk for British energy buyers.

US-Iran tensions continue to drive prices

The US-Iran conflict, now in its 149th day, remained the main driver of energy markets. After a tenth consecutive night of strikes, the US expanded military operations around the Strait of Hormuz, while Iran targeted US military bases in Jordan. This marked a further escalation in an already prolonged disruption to regional shipping and energy flows.

Diplomatic efforts led by Gulf states intensified later in the week, and both sides reduced military activity over the weekend. A second day without major attacks eased some immediate pressure, with front-month gas falling by around 8% to 9% at the time of the trading update. However, prices remain highly sensitive to developments in the conflict.

For UK businesses, the key risk is renewed escalation around the Strait of Hormuz. Further restrictions on shipping or energy flows could intensify competition for oil and LNG, placing fresh upward pressure on gas and power prices.

Traders’ View

The curve continues to show a clear divide between relatively expensive near-term contracts and more favourable pricing further out. Geopolitical uncertainty, weaker wind expectations and higher European cooling demand are keeping pressure on Winter 2026, while contracts such as Summer 2027 and later delivery periods offer better value by comparison.

For businesses approaching renewal, the current market supports securing longer-dated cover now while retaining flexibility over nearer-term volumes. A flexible contract can lock in the more attractive parts of the curve without committing the full requirement at today’s higher prompt prices, leaving buyers able to respond if near-term conditions ease.

Businesses with upcoming contract deadlines should review their exposure before further escalation or supply disruption pushes the wider curve higher. For live market support or to discuss purchasing options, contact the NGP trading desk at [email protected].

FAQ:

Why are UK gas prices rising?

UK gas prices are rising as global competition for LNG intensifies, European storage remains below seasonal norms and geopolitical disruption threatens major supply routes. Greater demand for gas-fired electricity generation can also add further pressure.

How is the Iran war affecting UK gas prices?

The Iran war is disrupting regional shipping and increasing uncertainty around energy flows through the Strait of Hormuz. Escalation can add a risk premium to gas prices and intensify competition for LNG, while signs of de-escalation can cause near-term contracts to fall quickly.

How does a heatwave affect European electricity prices?

A heatwave can raise electricity demand as homes and businesses use more cooling. High temperatures can also restrict French nuclear generation and disrupt coal deliveries to German power stations, increasing Europe’s reliance on gas-fired generation and placing upward pressure on electricity prices.

Why do French power prices affect UK electricity prices?

The UK and France exchange electricity through undersea interconnectors, with power generally moving towards the higher-priced market. If France requires more electricity, increased UK exports can reduce domestic availability and lift UK electricity prices, provided sufficient interconnector capacity is available.

Will UK business energy prices fall in 2026?

Near-term business energy prices may fall when geopolitical tensions ease or supply conditions improve, but the market remains highly sensitive to conflict, weather and LNG availability. With longer-dated contracts currently priced more favourably than nearer delivery periods, businesses may benefit from securing longer-term cover while retaining flexibility over when to purchase near-term volumes.