Gas, not power, is the UK’s energy risk this winter

The UK’s energy risk this winter is the price and supply of gas, not the electricity margin. NESO forecasts a de-rated electricity margin of 5.9 GW, 9.5% of peak demand. Gas is tighter. EU storage held 74 bcm on 1 October, against 85 bcm a year earlier. QatarEnergy has kept its LNG exports under force majeure since March. British gas for next-month delivery traded at 241p a therm on 28 October, the highest since 2022. For a business the exposure is cost first and interruption second. Insurance covers neither well.

Supply

Europe replaces pipeline gas with LNG, and the war has taken one of the largest LNG exporters out of the market. QatarEnergy declared force majeure in early March, after production halted at Ras Laffan and Mesaieed, and has extended it month by month. In late September it extended the notice to the end of November for several buyers. Kpler data put Qatar’s October exports on track for 0.6 million tonnes.

Gas Infrastructure Europe reported EU storage 72% full on 1 October. Its modelling shows storage falling to 13% by the end of March 2027 if LNG stays tight through a normal winter, and to about 11% in a cold one. Holding 30% at the end of winter would take about 96 bcm of LNG.

Britain holds little gas of its own in store. UK storage capacity equalled 5% of annual demand in 2024, against an EU average of 29%, and UK storage was 48% full at the start of October. Rough, about half of UK storage capacity, may not be there next winter: Centrica’s chief executive, Chris O’Shea, told the BBC the commercial decision would be to close it at the end of the first quarter.

Price

The Dutch TTF benchmark traded at €97.35 per MWh on 28 October, its highest in about four years, and British NBP at 241p a therm. Electricity follows: gas-fired stations set the British power price in most hours.

Ofgem raised the household price cap by 4% to £1,723 a year from 1 October. Cornwall Insight forecasts a further 16% rise, to £1,999, in January. Business energy has no cap. A business whose fixed contract renews this winter will be priced off forward curves at their highest since 2022.

Electricity

NESO’s Winter Outlook gives a de-rated margin of 5.9 GW and a loss of load expectation below 0.1 hours a year, against a reliability standard of 3 hours. The margin is narrower on a like-for-like basis: under NESO’s previous method it is 5.2 GW, or 8.4% of peak demand, almost 1 GW lower than last winter. NESO counts 10.3 GW of interconnector capacity, de-rated to 6.6 GW, so the margin depends on imports from markets short of the same gas.

What this means for a business

Cost

No insurance product covers a rise in the energy price. It belongs in the budget and in reserves. A business renewing a fixed contract this winter can fix part of its volume, or a shorter term, and keep the option of buying the rest if prices fall after a settlement in the Gulf.

Interruption

In a gas supply emergency, National Gas instructs the largest industrial sites to stop using gas first. Households are protected longest. A business that uses gas in production should know where it sits in that order.

Business interruption policies deal with a loss of utilities through an extension. Many require physical damage at the supplier’s premises, and most carry a sub-limit well below the main sum insured. An instruction to stop using gas damages nothing. Wordings also differ on a deliberate act by the supplier: some exclude it, and some cover it when it is taken to protect the network. Read the extension for its trigger, its limit and its time excess before the winter. It is the clauses, not yes or no explains why the wording decides the claim.

What would change this view

Three things would ease it: QatarEnergy lifting force majeure, a settlement that reopens Hormuz to normal traffic, and a mild winter. The first two would lower forward prices quickly. None of them would refill UK storage this winter. Our note on the Gulf war covers the shipping side.

Sources

1. Gas Infrastructure Europe, Europe enters winter with historically low storage levels, 9 October 2026.
2. The National, Britain faces sharp energy squeeze, 12 October 2026. UK storage, from ENTSOG; UK capacity against the EU, from government figures; Centrica on Rough; the Cornwall Insight forecast.
3. The National, Qatar extends LNG force majeure, 28 September 2026; and EnergyNow, Middle East LNG industry remains hostage of Iran war, October 2026, citing Kpler.
4. Tradingpedia, EU gas futures extend rally on Middle East supply risks, 28 October 2026. TTF and NBP front-month prices.
5. Ofgem, Energy price cap, 1 October to 31 December 2026.
6. NESO, Winter Outlook 2026/27, October 2026, as summarised by Watt-Logic, NESO winter outlook flattered by optimistic assumptions and a methodology change, 27 October 2026.
7. National Gas, Emergencies. The order of load shedding in a gas supply emergency.

This note gives general information on events and how insurance responds to them. It is not insurance, legal, actuarial or investment advice. Figures are as reported by the sources listed on the dates given, and will move.