On Monday, natural gas prices at the National Balancing Point (NBP) fell significantly, as renewable energy contributions played a key role in the British energy system’s transition from undersupply to oversupply. The market saw the sharpest declines at the short-term end, with the February 2025 front-month contract dropping by 6.75p/therm (0.23p/kWh), marking a 5.4% reduction from its previous settlement price.
What does this mean?
Recent data from NESO revealed wind power as the largest contributor to the UK electricity grid in 2024. It generated a record 83 TWh, accounting for 56% of total power generation. This growth in wind energy reduced reliance on gas-fired power plants (CCGTs), driving a 36% drop in CCGT demand. It coincided with a 77.6% surge in wind turbine output, underscoring the UK’s shift toward renewable energy.
Softer carbon prices drove further bearish sentiment in the gas market. According to the Intercontinental Exchange, the EU Allowance (EUA) December 2025 benchmark contract dropped by 2.1% on a daily basis. This decline matched an overall improvement in renewable energy contributions across Europe, ending the carbon market’s five-day rally. The lower carbon prices likely exerted additional downward pressure on gas demand over longer-term contracts.
Summary
As of Tuesday morning, NBP gas prices continued their downward trend, with the Summer 2025 front-season contract priced 2p/therm (0.07p/kWh) lower than its previous settlement. This decline was expected due to lower gas-fired power demand and an oversupplied system. Stronger wind power and milder carbon market activity also supported this movement.
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