Energy and Gas Procurement Before Winter – What Should Businesses Check?
Ahead of winter 2026/2027, businesses that have already secured part of their electricity or gas requirements face a specific question: should they hedge additional volumes now or wait? Energy and gas price forecasts alone are not enough to make this decision. They need to be assessed alongside how much energy has already been purchased, which delivery periods are covered, and the level of costs the company's budget can accommodate.
Before making another electricity or gas purchase, a business should review its hedged volumes, available budget, contractual terms, and current market risks. This helps ensure that procurement decisions reflect the company's actual purchasing position rather than short-term price movements alone.
Below, we outline the key market risks worth considering before making further purchases. These are not automatic signals to hedge all remaining volumes, but rather a starting point for reviewing your company's existing procurement position.
Before making another electricity or gas purchase, a business should review its hedged volumes, available budget, contractual terms, and current market risks. This helps ensure that procurement decisions reflect the company's actual purchasing position rather than short-term price movements alone.
Below, we outline the key market risks worth considering before making further purchases. These are not automatic signals to hedge all remaining volumes, but rather a starting point for reviewing your company's existing procurement position.
Have you already purchased part of your energy requirements and need a plan for what comes next?
Before getting in touch, prepare some basic information about your procurement model, delivery periods, and the proportion of your energy requirements already hedged.
Lets talk shopping situation
Winter Is Coming! What Should Businesses Check Before Buying Electricity and Gas?
Less than two months ago, large parts of the Northern Hemisphere were experiencing prolonged heatwaves and drought. Extreme temperatures put pressure on both power plants dependent on cooling water availability and transmission networks strained by high demand for air conditioning.
For European energy consumers, the situation was particularly challenging because the heatwave coincided with geopolitical tensions and limited availability of energy commodities.
Early October 2026 brought milder temperatures to Europe, although they remained above long-term seasonal averages, particularly in Mediterranean countries. Meanwhile, the situation around the Strait of Hormuz has not seen a breakthrough that would fully restore the predictability of oil and LNG supplies.
Winter is now approaching, bringing seasonally higher demand for natural gas, electricity, and heating fuels.
For European energy consumers, the situation was particularly challenging because the heatwave coincided with geopolitical tensions and limited availability of energy commodities.
Early October 2026 brought milder temperatures to Europe, although they remained above long-term seasonal averages, particularly in Mediterranean countries. Meanwhile, the situation around the Strait of Hormuz has not seen a breakthrough that would fully restore the predictability of oil and LNG supplies.
Winter is now approaching, bringing seasonally higher demand for natural gas, electricity, and heating fuels.
How Do Seasonality and Weather Affect Electricity Prices?
Europe, and indirectly Poland, continues to experience the consequences of poor hydrological conditions following the summer months.
This is particularly important for France, where the availability of some nuclear reactors has been constrained by cooling water conditions, as well as scheduled and unscheduled outages.
French nuclear power remains one of the main pillars of Europe's low-carbon electricity system. When nuclear availability declines, France has less capacity to export electricity to neighbouring countries, making the wider Western European market more dependent on gas- and coal-fired power generation.
This is particularly important for France, where the availability of some nuclear reactors has been constrained by cooling water conditions, as well as scheduled and unscheduled outages.
French nuclear power remains one of the main pillars of Europe's low-carbon electricity system. When nuclear availability declines, France has less capacity to export electricity to neighbouring countries, making the wider Western European market more dependent on gas- and coal-fired power generation.
Chart: Nuclear power availability in France. Source: Enerace Market Intelligence, 6 October 2026
This is particularly significant for northern Italy, which is strongly interconnected with the French electricity market and imports power from France.
Lower French nuclear output, weaker hydropower generation, and reduced renewable energy production can push electricity prices higher during peak demand hours.
Just a few days of low wind generation, cloudy weather, or a significant drop in temperatures can shift the market from relatively comfortable conditions to sharp increases in electricity prices.
This is particularly significant for northern Italy, which is strongly interconnected with the French electricity market and imports power from France.
Lower French nuclear output, weaker hydropower generation, and reduced renewable energy production can push electricity prices higher during peak demand hours.
Just a few days of low wind generation, cloudy weather, or a significant drop in temperatures can shift the market from relatively comfortable conditions to sharp increases in electricity prices.
Chart: Hourly electricity prices and power generation sources in Poland. Source: Enerace.online, 6 October 2026
Why Can Low Water Levels Increase Energy Costs?
Hydrological conditions also remain a challenge in Germany. Low water levels on the Rhine continue to partially restrict the transport of commodities to industrial consumers and power plants.
This is especially relevant for coal, which remains an important fuel in Germany's electricity generation mix, particularly during periods of high demand and weak renewable energy output.
Reduced barge loading capacity increases logistics costs and, in extreme cases, forces suppliers to rely on more expensive road or rail transport.
These limitations on fuel deliveries can ultimately increase electricity generation costs.
Chart: Hydrological conditions in Europe. Source: Enerace Market Intelligence, 6 October 2026
Gas Prices Ahead of Winter 2026/2027 – Are European Storage Levels Sufficient?
Natural gas remains one of the most important risk factors ahead of winter.
According to Enerace's analysis from early October 2026, Europe is entering the heating season with gas storage levels that are exceptionally low compared with the past decade.
This leaves a smaller safety margin in the event of severe cold weather, unexpected increases in demand, or potential future supply disruptions.
Market attention is particularly focused on Germany, where storage levels at the beginning of October were lower than during the same period in the previous year.
Natural gas continues to play a crucial role in Germany's heating, industrial production, and electricity generation.
According to Enerace's analysis from early October 2026, Europe is entering the heating season with gas storage levels that are exceptionally low compared with the past decade.
This leaves a smaller safety margin in the event of severe cold weather, unexpected increases in demand, or potential future supply disruptions.
Market attention is particularly focused on Germany, where storage levels at the beginning of October were lower than during the same period in the previous year.
Natural gas continues to play a crucial role in Germany's heating, industrial production, and electricity generation.
Chart: Natural gas storage levels in Germany since 2016. Source: Enerace.online, 6 October 2026
What Determines Natural Gas Prices for Businesses in Europe?
It would be misleading to assume that gas already held in storage alone determines current market prices.
Prices are primarily driven by expectations regarding marginal supply, including LNG availability, weather conditions, competition with Asian buyers, and the risk of transport disruptions.
If market participants believe that upcoming LNG shipments may arrive in Europe later than expected or be purchased by Asian buyers instead, prices can rise very quickly.
This can happen regardless of the prices at which companies purchased gas for storage several months earlier.
The situation around the Strait of Hormuz is particularly important. Any restrictions on shipping, higher insurance costs, or the threat of attacks on vessels and infrastructure can reduce the availability of flexible LNG cargoes for Europe.
Under these circumstances, Europe must compete on price not only internally but also with Asian markets, where natural gas demand typically increases during winter.
How Do Natural Gas Prices Affect Electricity Prices?
Higher natural gas prices have a direct impact on the electricity market.
Within the European power system, gas-fired power plants frequently set the marginal electricity price, which determines the price paid across the wholesale market.
This is particularly common in the evening, when solar power generation drops to zero while electricity demand remains high.
Within the European power system, gas-fired power plants frequently set the marginal electricity price, which determines the price paid across the wholesale market.
This is particularly common in the evening, when solar power generation drops to zero while electricity demand remains high.
What Is the Merit Order Mechanism?
The merit order is a mechanism that determines the order in which power generation sources are dispatched based on their marginal costs.
In simple terms, when a more expensive gas-fired power plant is needed to meet electricity demand, its generation cost may determine the wholesale electricity price for the entire market during that hour.
In practice, higher natural gas prices increase the cost of generating electricity in gas-fired power plants. The cost of CO₂ emission allowances and operating expenses must also be taken into account.
If a gas-fired unit is required to cover the final portion of electricity demand, its marginal cost may set the market price under the merit order principle.
This explains why tensions in the natural gas market can quickly translate into higher wholesale electricity prices, even when a significant share of electricity comes from wind, solar, nuclear, or coal generation.
However, the impact on an individual company's electricity costs depends on its procurement model and the extent to which prices have already been hedged.
Higher natural gas prices also improve the relative economic attractiveness of electricity generation from hard coal and lignite.
However, this substitution has its limits.
In Germany, available coal-fired generation capacity is already heavily utilised, while logistical difficulties on the Rhine limit the flexibility of coal deliveries.
Furthermore, greater coal consumption increases demand for CO₂ emission allowances, partly offsetting the cost advantage of switching fuels.
How Do Geopolitics and Oil Prices Affect Energy Markets?
Uncertainty in energy markets is further compounded by developments in the oil market.
Threats to shipping through the Strait of Hormuz and to Saudi export infrastructure along the Red Sea continue to support an elevated geopolitical risk premium in oil prices.
Partial restoration of exports or increased pipeline transportation may temporarily ease market tensions, but these measures do not eliminate the risk of further attacks, delays, or rising freight and insurance costs.
Higher oil prices also affect the wider energy sector.
They increase the cost of transporting LNG, coal, and fuels while contributing to volatility across commodity markets, particularly because some natural gas contracts remain indexed to oil prices.
When natural gas, electricity, oil, coal, and emission allowances are all sensitive to the same geopolitical developments, correlations between these markets can increase significantly.
Threats to shipping through the Strait of Hormuz and to Saudi export infrastructure along the Red Sea continue to support an elevated geopolitical risk premium in oil prices.
Partial restoration of exports or increased pipeline transportation may temporarily ease market tensions, but these measures do not eliminate the risk of further attacks, delays, or rising freight and insurance costs.
Higher oil prices also affect the wider energy sector.
They increase the cost of transporting LNG, coal, and fuels while contributing to volatility across commodity markets, particularly because some natural gas contracts remain indexed to oil prices.
When natural gas, electricity, oil, coal, and emission allowances are all sensitive to the same geopolitical developments, correlations between these markets can increase significantly.
When Should Businesses Buy Electricity and Gas? Don't Wait for the Perfect Moment
In such market conditions, the primary goal of an energy consumer should not be to achieve the lowest possible purchase price.
Purchasing the entire required volume at a single point in time creates the risk that the decision will coincide with severe cold weather, power plant outages, low renewable generation, or another disruption to LNG supplies.
One way to reduce the risk associated with a single purchasing decision is to hedge energy consumption gradually, in tranches spread over time and aligned with the company's actual consumption profile.
Purchasing the entire required volume at a single point in time creates the risk that the decision will coincide with severe cold weather, power plant outages, low renewable generation, or another disruption to LNG supplies.
One way to reduce the risk associated with a single purchasing decision is to hedge energy consumption gradually, in tranches spread over time and aligned with the company's actual consumption profile.
What Is Tranche-Based Electricity and Gas Procurement?
Tranche-based electricity or gas procurement involves gradually securing portions of the company's forecast consumption rather than purchasing the entire required volume at once.
This strategy can reduce the impact of short-term market price fluctuations on the company's budget.
Tranche-based hedging allows businesses to average their purchase prices over time, retain some flexibility, and limit the consequences of an unfavourable market entry point.
An initial tranche may secure a baseline volume and protect the budget, while subsequent purchases can be made as new information becomes available regarding weather forecasts, storage levels, LNG deliveries, and geopolitical developments.
Choosing this model requires consideration of contractual conditions, available procurement products, and the company's budget objectives.
Purchasing in tranches does not guarantee the lowest price, but it can support more predictable management of electricity and gas costs.
The coming winter does not necessarily mean an energy crisis.
Markets may experience price declines if LNG supplies stabilise, temperatures remain mild, and geopolitical tensions ease.
However, uncertainty remains too high to base an energy procurement strategy solely on expectations of further price corrections.
Long-term management of electricity and gas prices is not about predicting the future.
Above all, it is a way to protect the company's budget, margins, operational continuity, and competitiveness.
What Should Businesses Check Before Their Next Electricity or Gas Purchase? A Practical Checklist
Before deciding on the next procurement tranche, companies should assess four key areas:
Michał Gołąbek | Konsultant Enerace
- Current procurement position. How much electricity and gas have we already hedged, and for which delivery periods? What proportion of our expected consumption remains unhedged?
- Budget. What total energy cost are we prepared to accept, and how much headroom remains within that limit?
- Contractual terms. What purchasing decisions can we still make, and what are the relevant deadlines? Does our contract allow tranche-based purchasing?
- Decision-making rules. Under what conditions do we purchase additional volumes, when do we wait, and who approves the next purchase?
Michał Gołąbek | Konsultant Enerace
FAQ About Electricity and Gas Procurement Before Winter
1. Is It Worth Hedging Electricity and Gas Prices Before Winter?
Hedging energy prices can reduce the risk of rising costs during periods of increased demand.
However, this does not mean that every company should immediately purchase its entire remaining energy volume.
The decision depends on its current procurement position, budget, contractual terms, and acceptable level of risk.
However, this does not mean that every company should immediately purchase its entire remaining energy volume.
The decision depends on its current procurement position, budget, contractual terms, and acceptable level of risk.
2. Do Electricity and Gas Prices Always Increase During Winter?
No.
Although electricity and gas demand generally increases during winter, prices also depend on weather conditions, gas storage levels, LNG availability, renewable energy generation, and geopolitical developments.
A mild winter or improving supply conditions can contribute to lower prices.
Although electricity and gas demand generally increases during winter, prices also depend on weather conditions, gas storage levels, LNG availability, renewable energy generation, and geopolitical developments.
A mild winter or improving supply conditions can contribute to lower prices.
3. Is Tranche-Based Energy Procurement Better Than a Fixed-Price Contract?
Tranche-based purchasing allows companies to spread procurement decisions over time and reduce the risk of buying their entire energy requirement at an unfavourable moment.
A fixed-price contract, on the other hand, may provide greater cost predictability.
The right approach depends on the company's consumption profile, budget, contractual conditions, and risk management strategy.
A fixed-price contract, on the other hand, may provide greater cost predictability.
The right approach depends on the company's consumption profile, budget, contractual conditions, and risk management strategy.
Have you already purchased part of your energy requirements and need a plan for what comes next?
Before getting in touch, prepare some basic information about your procurement model, delivery periods, and the proportion of your energy requirements already hedged.
Lets talk shopping situation
