UK capacity hoarding on European links risks fresh price spikes, analysts warn

UK capacity hoarding on European links risks fresh price spikes, analysts warn Analysts say interconnector trading tactics are inflating Neso's balancing costs as Ofgem confirms bids well above realised imbalance levels, feeding UK power bills. UK consumers could be paying higher electricity bills because of suspected market manipulation, with so-called capacity hoarding during interconnector trading with Europe inflating the balancing costs of grid operator Neso, an analyst told Montel on Wednesday (2026-05-20).⁴ That matters because interconnectors are supposed to relieve price pressure, not add to it. The cables linking Britain to the European market exist to let cheaper power flow toward the tighter side. When traders hold capacity rather than use it, the relief mechanism becomes a cost mechanism, and the bill lands on consumers through Neso's balancing spend.⁴ The regulator has seen the pattern in its own data. Ofgem says there have been instances when parties submitted bids to Neso's capacity auctions at extremely high prices, well above the imbalance levels subsequently observed. That gap between the bid and the realised need is the tell. It suggests participants pricing for scarcity that did not materialise, or positioning to be paid not to deliver.⁴ The timing sharpens the concern. European gas has been violently repriced, with Dutch Title Transfer Facility front-month futures rising 35% on Tuesday (2026-05-19) to more than 60 euros per megawatt-hour, and around 76% higher on the week.² When the underlying fuel moves like that, any friction on the interconnectors gets amplified, because the price difference traders are arbitraging is far larger than usual.² Gas sets the marginal price across much of Europe, so a TTF spike feeds directly into the spreads that interconnector capacity is meant to close. Goldman Sachs estimated the supply disruption would cut near-term global LNG supply by about 19%, and roughly 25% of Europe's total gas supply is LNG, according to Chris Wheaton, oil and gas analyst at Stifel.² A market that imports a quarter of its gas as LNG is exposed precisely where the cables are supposed to help. Analysts have already flagged the upside. Europe could see power prices jump 10% from current levels this summer on hot, dry conditions, they told Montel on Wednesday (2026-05-20).³ Those are the scenarios in which hoarding behaviour does the most damage, because that is when the withheld capacity is worth the most.³ Not every market is equally exposed. Strong spring renewables and firm nuclear output should limit the shocks in several markets, analysts warned, even as the war lifts gas-driven upside risk for second-quarter European power.¹ The harder problem is enforcement. Capacity hoarding sits in a grey zone between legitimate risk management and abuse, and proving intent from bid data is slow. Ofgem has the evidence that bids ran above realised imbalance levels, but a documented pattern is not yet a finding of manipulation.⁴ Until the regulator moves, the incentive structure stays intact. Watch Neso's balancing cost disclosures through the summer, and watch the bid-to-imbalance gap Ofgem flagged.⁴ If Dutch TTF front-month holds above 60 euros and the heat scenarios play out, the interconnectors become more valuable to withhold, not less.^2,3 The cables were built to import cheaper power. The risk now is that they import a pricing problem instead.