UK Energy Price Forecast: What Care Homes Should Expect from Late 2026 into 2027 — Greystones Energy Ltd

UK Energy Price Forecast: What Care Homes Should Expect from Late 2026 into 2027

The UK energy market has been through an extraordinary few years. The wholesale price shock of 2021–2022, driven by post-pandemic demand recovery and the disruption to European gas supply following Russia's invasion of Ukraine, pushed business energy costs to levels that were genuinely existential for some care home operators. Since then, prices have fallen substantially — but they have not returned to the pre-crisis norms of 2019 and 2020, and the market remains structurally more volatile than it was a decade ago.

As we move through the final quarter of 2026 and into 2027, care home operators face a set of decisions about energy procurement that will have a meaningful impact on operating costs for the next one to three years. This article sets out what the current market signals suggest, what the key risks are, and what practical steps operators should be taking now.

UK wholesale gas prices — which remain the primary driver of electricity costs through the gas-fired generation that still sets the marginal price in the UK power market — have been trading in a broadly stable range through mid-2026, significantly below the crisis peaks of late 2022 but roughly two to three times the levels seen in 2019.

For business electricity, the all-in unit rate for a care home procuring a new fixed contract in Q3 2026 is typically in the range of 22–30p/kWh, depending on consumption volume, contract length, and the specific supplier. Gas contracts are typically in the range of 5–8p/kWh. These figures include network charges, levies, and VAT at the reduced 5% rate applicable to care homes.

For context, a 60-bed care home consuming around 400,000 kWh of electricity and 600,000 kWh of gas per year would be looking at an annual energy spend in the region of £120,000–£160,000 at current market rates — substantially higher than pre-2021 norms, but well below the crisis peaks of 2022–2023.

Several factors will shape the direction of energy prices over the next 12 to 18 months. None of them point unambiguously in one direction, which is precisely why the market remains volatile.

The UK is now significantly more dependent on liquefied natural gas (LNG) imports than it was before the Russian supply disruption. LNG prices are set globally, and UK wholesale gas prices are therefore increasingly sensitive to demand signals from Asia — particularly China and Japan — and to the pace of new LNG export capacity coming online, primarily from the United States and Qatar.

Current forecasts from the major energy analysts suggest that new LNG supply capacity coming online in 2026–2027 should provide some downward pressure on global gas prices. However, this is contingent on demand from Asia remaining moderate and on no significant supply disruptions. Either factor could reverse the picture quickly.

The UK government's ongoing electricity market reform programme — including the move towards a zonal pricing model under the Review of Electricity Market Arrangements (REMA) — introduces medium-term uncertainty for business electricity buyers. The direction of travel is towards a market that better reflects the geographic distribution of renewable generation, but the transition creates pricing uncertainty that is difficult to model over a two to three-year horizon.

In the near term, the continued build-out of offshore wind capacity is expected to put downward pressure on wholesale electricity prices during periods of high wind output. However, the intermittency of wind means that gas-fired generation will continue to set the marginal price during calm periods, keeping the gas-electricity price linkage intact.

The UK Emissions Trading Scheme (UK ETS) carbon price and the various levies embedded in electricity bills — including the Contracts for Difference (CfD) levy that funds renewable energy — add a layer of cost that is largely independent of wholesale market movements. These costs have been rising and are expected to continue doing so as the UK's net zero transition accelerates. For care homes, this means that even if wholesale prices fall, the all-in unit rate may not fall proportionately.

The energy market remains acutely sensitive to geopolitical events. The situation in the Middle East, the ongoing conflict in Ukraine, and tensions in other gas-producing regions all represent tail risks that could push prices sharply higher at short notice. This is not a forecast — it is a reminder that the range of possible outcomes is wider than the central case.

The consensus view among energy market analysts as of September 2026 is broadly as follows:

• Q4 2026: Prices likely to remain at or slightly above current levels, with seasonal demand for heating pushing gas prices modestly higher as winter approaches. The forward curve for winter 2026–27 is pricing in a modest premium over summer 2026 levels.

• H1 2027: If the winter is mild and LNG supply remains adequate, there is a reasonable case for prices to ease back towards the lower end of the current range. However, a cold winter or any supply disruption could push prices materially higher.

• H2 2027 and beyond: Greater uncertainty. The balance of new LNG supply against demand growth, the pace of UK renewable build-out, and the trajectory of electricity market reform will all be significant factors. The central case is for prices to remain broadly in the current range — elevated relative to pre-2021 norms but stable — with the risk skewed to the upside rather than the downside.

It is important to be clear about what these forecasts are and are not. They represent the current best estimate of market direction based on available information. They are not a guarantee, and the energy market has a well-documented history of surprising even the most sophisticated forecasters.

Given this backdrop, what should care home operators actually do?

This is the most time-sensitive situation. You are approaching a renewal window, and the decisions you make now will lock in your costs for the next one to three years.

The key question is whether to fix now or wait. Fixing now gives you certainty at current rates. Waiting is a bet that prices will fall before your contract expires — a bet that may or may not pay off, and that carries the risk of being caught by an auto-rollover if you leave it too late.

In the current environment, most independent advisers would suggest that fixing for a 12 to 24-month term at current rates is a reasonable approach for most care homes. The downside of fixing — missing out on a price fall — is manageable. The downside of waiting and being caught by a price spike or an auto-rollover is potentially severe.

You have time, but you should be using it. Now is the moment to:

• Confirm your contract end date and renewal window
• Understand what your auto-rollover terms are
• Begin monitoring the forward market so you can act quickly when conditions are favourable
• Consider whether your current contract length and structure still makes sense

Flexible contracts can deliver excellent outcomes when managed actively, but they require close attention to market movements. If you are on a flexible contract and not actively managing your purchasing positions, you may be carrying more risk than you realise. This is worth reviewing with your broker or adviser.

In a market where the structural floor for prices appears to be higher than the pre-2021 norm, there is a reasonable argument for locking in longer-term contracts — two or three years — when prices are at the lower end of the current range. This reduces the frequency of procurement decisions and provides greater budget certainty, which is particularly valuable for care homes operating under local authority fee frameworks that do not adjust quickly to cost increases.

The most effective long-term strategy for managing energy cost risk is not purely about procurement — it is about reducing your consumption and generating your own power where possible.

A care home with a well-designed solar PV system covering 20–30% of its electricity consumption is materially less exposed to electricity price movements than one that buys 100% from the grid. Similarly, a home that has completed an LED retrofit and installed smart heating controls has a lower consumption base, which means that any given price movement has a smaller absolute impact on its cost base.

These measures take time to implement, but the combination of procurement discipline and consumption reduction is the most robust approach to managing energy costs over the medium term.

For care home operators preparing budgets for 2027, the following assumptions represent a reasonable central case based on current market conditions, while acknowledging the uncertainty involved:

• Electricity unit rate: 23–28p/kWh all-in (for a well-procured fixed contract)
• Gas unit rate: 5–7p/kWh all-in
• Standing charges: broadly stable year-on-year
• Levy and network costs: modest upward pressure, likely 2–5% year-on-year

These figures should be treated as planning assumptions, not guarantees. We would recommend building a contingency of at least 10% into energy budget lines for 2027, given the range of possible outcomes.

We monitor the wholesale market continuously and provide our clients with timely guidance on contract timing and procurement strategy. If your contract is approaching renewal, or if you are unsure whether your current procurement approach is serving you well, we are happy to provide a free, no-obligation review.

We will tell you what your current contract is costing you relative to the market, when your renewal window opens, and what your options are — with no pressure and no obligation.

Request a free energy review