Energy costs remain a critical operational variable for businesses across the UK and with wholesale energy markets experiencing ongoing fluctuations, managing these costs is increasingly important.
We monitor these shifts closely to ensure we provide commercial stability for the businesses that rely on our infrastructure. As such, we have taken steps to secure fixed energy pricing for our clients due to the recent geopolitical events influencing market rates.
In the UK, electricity prices are intrinsically linked to wholesale gas prices. This connection exists primarily because of the marginal pricing model used within the national power market. In short, the price of electricity is determined by the most expensive method of generating power that is needed to meet the country’s electricity demand at any given moment. Since gas-fired power stations are often used to quickly adjust and balance the electricity supply (because they can be turned on and off relatively easily), gas frequently ends up being the ‘marginal fuel’ (i.e. the one that sets the price for electricity). So, when gas prices go up, electricity prices tend to rise as well. As such, gas effectively controls the baseline operating costs for almost every commercial enterprise in the country and when geopolitical shocks push gas prices upwards, electricity prices inevitably follow.
Since the beginning of March 2026, UK wholesale gas prices have more than doubled, triggered by the US-Israeli conflict with Iran. This surge has prompted a significant spike in the electricity wholesale market. According to Reuters, European benchmark gas prices have risen by more than 50% since this conflict began, reflecting market anxieties over potential supply chain disruptions in the Middle East.
Managing such extreme volatility requires careful planning. While the current market movements are significant, they are not yet comparable to the severe price shocks that followed the Russian invasion of Ukraine. During the height of that energy crisis, wholesale power prices peaked at a 400% increase. At the time, we pursued prudent power buying strategies and secured energy contracts that limited the commercial impact to around 40% for our clients, thus absorbing and mitigating the worst of the 400% market peak.
The situation in the Middle East has given us cause to fix prices again in the interests of our clients. Because industry does not have the luxury of a price cap, businesses are entirely exposed to the fluctuations of the wholesale market unless they put specific purchasing agreements in place. For data centres like ours, unmanaged exposure to the wholesale market represents a significant financial risk. For the sake of our operations, and those of our clients, we need to know our operational expenditure well in advance so relying on variable rates is not a sustainable option.
Due to the ongoing volatility in global gas markets and the absence of commercial price caps, we have taken definitive action to protect our clients from unpredictable operating costs through fixed power pricing. This locked-in rate shields our clients from the current market uncertainty, as well as any future market shocks, for at least the next 18 months.
We made this decision based on a factual assessment of current geopolitical risks and the structural realities of the UK electricity market. By securing these rates now, we ensure that our clients will not be subjected to sudden billing increases if global energy markets experience further disruptions.
The past few years have demonstrated exactly how volatile the geopolitical environment can be and our focus remains on delivering resilient infrastructure and commercial stability despite the uncertainty. By fixing power prices for the next 18 months, we provide a predictable environment where businesses can plan their IT operations with total confidence in their cost base.
If you are considering your options for colocation, we invite you to arrange a tour of our Manchester or Farnborough data centres to see our facilities and operations first-hand.