Our Energy Economist, Dominic Whittome, shares his latest Energy Highlights as part of a four-part series examining key movements across oil, gas, and electricity markets in 2025. In this piece, he explores the apparent stability in UK and European power prices and the deeper liquidity issues sitting beneath the surface.
Initial Power Market Update
Approaching mid winter there is an eerie calm in the market with Forward Year Base-load trading around the £75.00/MWh watermark. So still inside a £70.00 to £80.00/MWh range which has lasted barely-interrupted since the Midsummer edition of Energy Highlights issued in June. A tale of seemingly unprecedented electricity price stability.
Liquidity Concerns
Appearances can be deceptive and stability and market liquidity are obviously important facets of any commodities’ market. Power traders across the Northern European corridor now complain of a near-total absence of liquidity more than a few months out on the curve. The curtailment of tradable OTC volumes is further undermining confidence in posted bids and offers, warding off market entry & participation thereby reinforcing the cycle. Such inefficiency will partially explain why we see such a sedate-looking power market, however brittle it might finally turn out as proprietary traders and market-markers simply roll forward their pre-existing short & long positions into subsequent months, which might itself also explain some of the liquidity seen, scarce as it is.
As a result, the mainstream contingency traders, industrial and commercial users (buyer of necessity without equity power generation of their own) find themselves increasingly confined to the front (short-dated) end of the curve. The corollary here is that market impacts which should be transitory & minimal short-term could have a more profound impact on short-dated power prices and also a disproportionate ripple effect on long-dated prices further too amid an anesthetised forward market with little or no meaningful liquidity to speak of.
Consequently, I&C businesses may simply have to rely on what the OTC Forwards or ICE Futures markets are telling them, despite untrustworthy prices, and similarly their inter-dealer brokers (i.e. OTC not TPI broker) tells them as they seek to renew their next electricity supply contacts as the April Year 2026 Buying Round now gets underway.
Dominic Whittome
Dominic Whittome is a energy consultant with a background in economics and econometrics. He has 28 years of experience in the industry principally in the supply, trading and corporate finance spheres. Serving as analyst, commercial manager and head of trading within EDF Energy, ENI UK and Mobil North Sea before he joined Prospect Law and has since specialised in energy purchasing; contract arbitration and commercial development of infrastructural and renewable power projects.
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