Analysts Flag El Niño Winter Relief for UK Power but Warn of Persistent LNG Squeeze
Analysts say milder, windier conditions may cap UK power prices this winter, though Iranian damage to Qatari LNG export capacity complicates any sustained easing.
UK Power Cal+1 prices stood at £114.93/MWh on Wednesday (2026-09-23), with Q+1 at £147.14/MWh, as analysts told Montel this week (week of 2026-09-21) that an unusually strong El Niño could limit further winter gains by bringing milder temperatures and above-average winds to Britain. The forecast marks the first sustained seasonal argument against higher UK power prices in months.5
Both contract levels reflect a European gas market that has risen roughly 40% from pre-conflict levels following the Strait of Hormuz closure and Iranian attacks on Qatar's LNG export infrastructure, Montel reported. ICE Endex TTF front-month gas stood at €73.37/MWh on Wednesday (2026-09-23).2
The El Niño forecast works through two mechanisms for UK power. Warmer-than-normal winter temperatures reduce heating demand, easing the call on gas-fired generation. Stronger Atlantic winds lift renewable output substantially, displacing gas from the dispatch stack. That shift also compresses demand for UK carbon allowances, since gas-fired plant carries the highest emissions intensity among dispatchable sources. Both effects together support the forecast that UK power demand will run below seasonal norms this winter.5
The supply side is harder to improve with weather. Analysts told Montel on September 1 (2026-09-01) that European gas prices could still jump 19%, or roughly EUR 13/MWh, even if El Niño delivers its milder-than-average winter. The driver: a continuing squeeze on LNG deliveries caused by the Hormuz closure.4
Iran's strikes on Qatar's Ras Laffan complex damaged 17% of the facility's LNG export capacity. Qatar has said repairs will take three to five years. Ras Laffan accounts for roughly 20% of global LNG supply, so the outage adds persistent tightness to the Atlantic basin that seasonal weather alone cannot offset.3
European storage entered this pre-winter period already depleted. Germany's gas storage sites were 30.6% full as of May 27 (2026-05-27), according to Gas Infrastructure Europe data, well below the 38.65% recorded at the equivalent point in 2025. Uniper chief executive Michael Lewis said at the time that insufficient injection rates put Germany at risk of winter shortages and called for incentives to accelerate fills. Low starting storage means any cold snap requires more aggressive LNG imports, amplifying European exposure to the Hormuz constraint.2
Those two forces — El Niño dampening demand and Ras Laffan constraining supply — do not cancel. Mild weather reduces the volume of gas drawn from storage and eases seasonal import needs. But it cannot replenish a market that is structurally short of Atlantic LNG cargoes, particularly if competing Asian demand keeps JKM prices elevated.4,3
UK carbon allowances add another variable. The UKA contract stood at £57.62/tCO2 on Wednesday (2026-09-23). A wind-heavy, mild winter would reduce gas dispatch and compress carbon demand from power generators. Any cold spell that overwhelms the El Niño signal would reverse that logic quickly.5
Analysts warned Montel in May 2026 (2026-05-21) that El Niño was already amplifying volatility across European power markets through its interaction with summer heatwave risk, a sign that the pattern raises forecast dispersion as much as it shifts averages in one direction. For UK power traders, the near-term focus is whether the seasonal model holds through the winter heating season. If El Niño delivers below-average temperatures and above-average wind for December through February, the demand-side relief could partially offset the supply premium that has accumulated in UK power forward prices since the Middle East conflict began. If the forecast fades, the storage deficit and Qatar's impaired LNG output are the variables left to price.1,4