The Rise and Fall of the DA Market

Craig Watson • 10 May 2023

Over the past 12-18 months, there's been a significant amount of well publicised turmoil and uncertainty within the energy markets, and for many businesses they've been stuck between a rock and hard place when it's come to understanding the best way to protect and future proof their business when needing to negotiate and secure extensions to their Electricity supply contracts.


The post-Covid energy market was struggling to regain stability long before the Russian invasion of Ukraine back in March 2022, but the volatility reached record levels with a constant upward trend of pricing across all seasons between Jun'22-Jan'23, a rise which resulted in Government support arriving in the form of the EBRS, designed to help business between Oct'22-Mar'23. The EBRS offered hope by protecting contracted rates with varying levels of discount depending on when agreements were secured, however with delays and confusion on how the discount would be applied, customers were subject to agreeing contracts without knowing the billed rates, which in-turn appeared to be considerably more than first anticipated.


One of the factors creating the confusion was the inability for customers and brokers to decipher how suppliers breakdown their costing of the 'Commodity' and 'Non-Commodity' elements which make up the fully delivered cost of the p/kWh customers pay for their Electricity.


As the EBRS discount only applied to the 'Commodity' element, there was a huge need to clarify this separation but as is often the case, disclosure and transparency of the Commodity costings weren't available, leaving a guessing game which had hundreds and thousands, sometimes millions on the line when it came to forecasting budgets for businesses across the EBRS period.


As time has moved, it's become evident that a large number of suppliers struggled to price with consistency throughout this period and with prices quoted around the £1/kWh figure at various points in Aug/Sept, the fallout for some businesses could last long into the future as they struggle to navigate the cost impact and balancing act of energy spend vs core business costs elsewhere.


So what can we learn from this and how can we protect ourselves from the risk of similar challenges re-surfacing within the markets as we move forwards?


For me, I believe the answer lies within the transparency and retrospective review of the Day Ahead (DA) markets.


Whilst the focus of this article is on the Electricity Market pricing, the DA for Gas pricing is somewhat transferrable in theory and the considerations of the DA benefits moving forwards resonate for both.




The settled DA Prices per Month over the last 10 years


Using the above information taken from NordPool, it evidences how the DA markets have settled every month for the past 10 years, dating back to 2014.


Just for early reference, the DA markets are priced daily and their costs are usually dictated by the demand and available supply within that day, forecasted the day ahead.


You cannot agree to buy energy at the DA price, instead you are settled at the average cost of the market at the end of each month.

With this strategy there's usually a huge amount of associated risk, in the sense you move into each month not knowing your potential cost exposure, and there's no ceiling what the costs could be, but this is where history and a retrospective review tends to start easing concerns.


Prior to the conclusion of 2020, no month had ever settled above £70/Mwh, which translates to 7p/kWh on the commodity. This despite multiple periods of political conflict, the passing of worldwide targets to reduce global emissions & change the way energy is generated and the rise of global warming, which has increased the unpredictability of seasonal demand for energy across the UK.


Whilst non-commodity costs have risen over this period and a definitive cost for the whole date range can't be exact, a high end average 50/50 split would have seen another 7p/kWh added to deliver a final cost of Electricity at 14p/kWh in the worst month (Most months would have settled around or below 10p/kWh).


Following 2021 and the resulting market challenges, the DA has increased considerably, throughout 2022 the monthly average was just above £203/Mwh, which equates to a 20.38p/kWh unit rate for Commodity.


If we then look to double the 7p/kWh of Non-Commodity charges from 2020 to reflect the increases that have come within transportation, distribution, and other levy's, we'd have a 14p/kWh non-commodity cost to add to the 20.38p/kWh commodity, which averages at approximately 35p/kWh.


Now we fully appreciate 35p/kWh still presents significant challenges for most businesses, especially those within energy intensive industries, however when the market was quoting unit rates in excess of 60p/kWh and ranging as high as £1/kWh as previously mentioned, you begin to see how much risk suppliers are factoring into longer term fixed contracts, risk which in reality never materialises when using the DA settlement as your evidence.


As we approach the midway point of 2023, we're starting to see a small period of stability within the markets, however prices predominantly still sit north of 30p/kWh, which is not likely to fall too dramatically any time soon as we'll soon be creeping towards winter months once again where prices typically rise.  However, when we reflect and compare the first 4 months of 2022 with those of 2023, we can see that the average DA pricing between Jan-Apr has fallen from an average of £193.48 (2022) to £121.28 (2023), which is a reflective 7.2p/kWh saving (a 37% reduction), something which I feel certainly acts as a sign of optimism.


Now for the average manufacturing business using approximately 500,000kWh per annum (45,000 per month), that's the equivalent of almost £13,000 savings in 4 months, which equates to a forecasted £39,000 saving over the year if the trend continues.


With this in mind, the question becomes how can businesses access the DA markets, and is this something for you to consider in advance of your next renewal period.


Unfortunately the DA pricing can only be accessed via a Flexible Energy Contract and in order to access one of these, you're annual usage volume needs to reach a certain level of consumption, however the potential is there to collaborate with other like minded businesses and work within a basket or consortium that will see you benefit from a more sophisticated purchasing strategy, managed and accounted for by an experienced energy consultant.


At this time, I'd strongly recommend that early engagement will help businesses better prepare for every eventuality and with the right thresholds and parameters agreed, a bespoke renewal strategy can be tailored and managed by a consultant behind the scenes, only engaging when the market reaches triggers that warrant further conversation.


If that's support that you feel would interest you and your business, get in touch and I'll happily work to create a renewal strategy that works best for you and your business, whilst providing the confidence and accountability that allows you to revert back to the core focus and operations needed in other areas of the organisation.



To learn more about how I can help, feel free to contact me at craig@seemoreenergy.co.uk

The British Industry Supercharger

30 October 2025
With government-imposed charges making up an increasing percentage of business energy bills, it is becoming difficult for many UK industries to remain competitive in international markets. This led to the introduction of the British Industry Supercharger (BIS). A scheme for energy-intensive businesses that aims to counteract many of the government-imposed environmental levies and the rising transmission charges. In this article, we cover how it works and what your business needs to know to benefit from it. What is the British Industry Supercharger? Launched on the 1st April 2024, the British Industry Supercharger is a strategic package of relief measures aimed at energy‐intensive industries (EIIs) such as steel, metals, chemicals, cement, glass and paper. The aim is to reduce electricity non‐commodity costs so UK foundational industries can compete with businesses in nations with lower energy costs. The BIS is comprised of 3 sections: 1. Relief from Renewable Levies This provides businesses with exemptions from paying Renewables Obligation (RO), Feed-in Tariff (FiT), and Contracts for Difference (CfD). These charges were added to invoices in order to fund green-power generation. Under the Supercharger, eligible EIIs can receive up to 100% exemption from these charges. 2. Network Charging Cost Compensation This offers discounts on electricity network charges - including Transmission Network Use of System (TNUoS) and Distribution Use of System (DUoS) fees. These fees cover the cost of maintaining the national grid and distribution networks, but can represent a large proportion of industrial energy bills. The BIS introduces a Network Charging Compensation (NCC) mechanism, reimbursing eligible firms for around 60% of these costs. 3. Capacity Market Exemption The scheme offers eligible business a full exemption from Capacity Market charges. The Capacity Market is funded through indirect charges on electricity bills with the aim of funding generators to ensure they are available during supply-peaks.

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What happens when a supplier fails?

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MHHS: Market-Wide Half-Hourly Settlements

6 October 2025
Market-Wide Half-Hourly Settlement (MHHS) What is MHHS? MHHS stands for Market-Wide Half-Hourly Settlement. Currently, most electricity is billed based on estimates or meter reads that can be provided monthly, quarterly, or sporadically. With MHHS, electricity consumption will be accounted for and billed in 30-minute blocks. The idea is that with more precise, time-based data, suppliers and networks can match supply and demand more accurately. This helps reduce waste and allow more flexibility in how electricity is used across the system. Who does it apply to? Previously, only large industrial and commercial users needed to have half-hourly meters, but MHHS is intended to apply across the whole electricity market in Great Britain. This includes domestic consumers, small businesses, large industrial users, and everything in between. That means most electricity users will be indirectly affected, even if they don’t see anything change in how their meter looks, the rules behind billing and settlement will shift behind the scenes.

September 2025 Review

1 October 2025
September Review By Adam Novakovic We have reached the time of year where the summer months have started to fade and we begin to think about the colder seasons. This month saw the UK government recognise Palestine as a country, although they still seem unable to recognise the harm their energy policies are causing UK businesses. With further charges set to be added to UK energy bills and rising non-commodity costs, it was a relief that wholesale energy prices remained fairly flat throughout September. A recent report from independent analysts Cornwall Insights revealed that large energy users who aren’t covered by Government schemes could find that they are paying a further £450,000/year in non-commodity costs by 2030. With non-commodity costs such as DUOS and TUOS charges –which are used to fund the infrastructure responsible for the transmission of electricity – now accounting for over 2/3rds of total electricity costs for some businesses, it is of growing concern that these charges are set to continue rising. With the TUOS charges for 26/27 expected to increase significantly , the non-commodity charges are starting to have a negative impact on UK businesses ability to compete against foreign businesses with fewer governmental charges on their energy bills. This growing concern is yet to be addressed but could have a huge impact on many industries in the next year.

RIIO - ET3 and increasing costs

25 September 2025
Following on from our previous article about rising TNuOS costs , we look at the reasons behind energy price rises, and which other items on your bill are likely to increase in the near future. What is RIIO – ET3? RIIO: “Revenue = Incentives + Innovation + Outputs” is Ofgem’s regulatory framework for setting how much network operators can recover from users while delivering value, efficiency and innovation. The current RIIO-2 period ends 31 March 2026, and RIIO-ET3 (also called RIIO-3) will run from 1 April 2026 through 31 March 2031.

How TNUoS costs are set to rise

17 September 2025
How TNUoS costs are set to rise As the UK pushes towards a low-carbon energy system, there has been a sharp rise in costs for businesses connected to the grid. The National Energy System Operator (NESO) has released its latest five-year outlook on Transmission Network Use of System (TNUoS) charges, and -- from April 2026 – energy costs will rise significantly to fund the country’s energy transition. What Are TNUoS Charges? NESO uses the funds from TNUoS charges to build, operate, and maintain the high-voltage transmission network across Britain. The forecasts for 2026/27 have indicated that NESO will be looking to almost double the revenue generated in the previous year. While suppliers pass these charges on to both households and businesses, the scale of the increases ahead will be most acutely felt by large energy users.

ESOS Phase 4: What Businesses Need to Know

8 September 2025
ESOS Phase 4: What Businesses Need to Know The Energy Savings Opportunity Scheme (ESOS) Phase 4 is underway, starting on 6 December 2023, with a compliance deadline of 5 December 2027 . UK businesses must understand ESOS Phase 4 eligibility , key changes, and deadlines to ensure compliance and avoid penalties. This guide covers everything you need to know about ESOS Phase 4 for UK businesses . Who needs to comply with ESOS Phase 4? The ESOS Phase 4 eligibility criteria remain consistent with Phase 3. Your organisation qualifies as a “large undertaking” if, on the qualification date of 31 December 2026 , it meets all of these requirements: Based and registered in the UK Employs 250 or more people Has an annual turnover above £44 million Has an annual balance sheet total over £38 million To confirm your ESOS Phase 4 eligibility , visit our site and answer the questions to see if your business should be participating. Even if you don’t currently meet these criteria, crossing the threshold by the qualification date means you must submit a compliance notification by the ESOS Phase 4 deadline of 5 December 2027 . If your business qualified for Phase 3 but no longer meets the criteria, you must submit a “Do Not Qualify” (DNQ) notification via the Environment Agency’s MESOS portal. Key requirements for Phase 4 Phase 3 introduced the requirement for organisations to create an Action Plan that set out how you intend to cut energy use and when. That same principle continues in Phase 4, along with mandatory progress reporting in the years that follow. However, there are some updates to note: Action plan progress must now be included within your ESOS assessment. If commitments aren’t met, your business will need to explain why. Display Energy Certificates (DECs) and Green Deal Assessments (GDAs) are no longer valid routes to compliance. While net zero reporting will not yet be mandatory, you can choose to adopt the new PAS 51215 standards for voluntary energy and decarbonisation reporting. This could give your organisation a head start before net zero requirements arrive in Phase 5. These ESOS Phase 4 key changes ensure businesses focus on actionable energy efficiency measures and transparent reporting.

August 2025 Review

1 September 2025
August Review By Adam Novakovic August was a month that saw the return of domestic football and the return of one of the most prolific energy narratives of the last 5 years, as the conflict between Russia and Ukraine once again dominated the headlines.

Nuclear Regulated Asset Base Levy

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