Energy markets remain backwardated: why businesses should act now
Wholesale energy prices remain in backwardation but the opportunity to secure lower forward prices is narrowing.
Over recent weeks, wholesale energy prices have stabilised, but markets remain backwardated – with contracts for Winter-26 and Winter-27 still priced below Winter-25. While backwardation has been reducing, it continues to present an opportunity for businesses to secure competitive forward rates.
The numbers behind the market
Wholesale energy pricing for both power and gas is showing backwardation:
| Power prices (wholesale only)* | Gas prices (wholesale only)* |
|---|---|
| Oct 25 – Sep 26 – 7.85p/kWh Oct 26 – Sep 27 – 7.48p/kWh Oct 27 – Sep 28 – 7.16p/kWh |
Oct 25 – Sep 26 – 2.89p/kWh Oct 26 – Sep 27 – 2.72p/kWh Oct 27 – Sep 28 – 2.50p/kWh |
This means future-year contracts are still priced below near-term ones but the gap is narrowing. Delaying could mean losing the chance to secure favourable longer-term rates.
Buying energy smarter guide
Our “Buying energy smarter: Cost control opportunities in 2025 and beyond” guide talks you through what backwardation is and what to consider when leveraging it.
Market drivers
Several key factors are shaping the current landscape:
- Gas storage stability – Europe is on track to reach 90% storage capacity by December, supporting a comfortable winter outlook.
- Geopolitical pressures – Initial optimism over Russia-Ukraine peace talks is fading, with little sign of an imminent deal.
- Weather outlooks – Forecasts point to a warm start to winter, though La Niña and El Niño could still introduce risk later in the season.
- Strong renewable contribution – European solar, hydro, and nuclear supply are all strengthening, easing pressure on UK power prices.
What this means for businesses
For business leaders managing budgets and risk, the message is clear:
- Secure cost certainty while backwardation lasts
- Protect against future volatility and supply shocks
- Use flexible procurement to benefit if markets fall again
Acting now means you don’t just lock in value, you preserve flexibility while the market remains in your favour.
How can Inspired help?
Our energy experts are closely monitoring market movements and advising businesses on the best strategies to manage risk and secure value. Whether your organisation is fully hedged or reviewing open positions, we can help you navigate the current environment and prepare for the future.
Speak to Inspired today to explore how we can strengthen your energy strategy and secure long-term value while the market is at a low. Please email us at [email protected]
