Will energy prices go down in 2024?

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Energy prices have been a big concern for households across the UK for the last couple of years. But will energy prices go down this year?

The good news is that many of us will be paying less for our energy use over the remainder of 2023 thanks to a drop in the energy price cap.

So why are our energy bills set to fall? And what can we expect to pay for our energy use?

We look into that below, but if you just want to do an energy comparison, see how to find the best gas and electricity deals.

Energy bills are falling from October

The big factor for most of us when it comes to energy bills currently is the energy price cap (see what is the energy price cap?). The energy price cap is set by regulator Ofgem and limits what energy companies can charge those on standard variable tariffs (the vast majority of households) for each unit of gas and electricity. 

This changes every three months and is largely driven by changes in the cost of energy on the wholesale market – what firms themselves pay. Those costs rose substantially at the start of the energy crisis which led to a large number of suppliers going out of business.

Now, wholesale prices are gradually coming down, though are still a lot higher than before the energy crisis hit.

The energy price cap is currently set at £2,074 a year for a typical household for the July to September period. But Ofgem has announced it will drop by an average 7% on 1 October to £1,923 a year for a typical household.

If you want to see if you could save money by switching off the price cap, see how to do an energy comparison.

Will energy prices go down in the next year?

After the price cap drops in October, it is expected to fluctuate a fair bit over the next year. Analysts at Cornwall Insight publish regular forecasts for what the cap is likely to be set at for the coming year, based on movements in the wholesale markets. Here’s what Cornwall Insight (last updated on 29 September 2023) expects to happen to the energy price cap in the months ahead:

Time period Price cap on current typical use figures Price cap on new typical use figures
Current cap: 1 Jul 2023 to 30 September 2023 £2,074 a year £1,976 a year
Confirmed new cap: 1 October 2023 to 31 December 2023 DOWN 7% - £1,923 a year DOWN 7% - £1,834 a year
1 January 2024 to 31 March 2024 UP 4% - £1,996 a year - PREDICTION UP 4% - £1,898 a year - PREDICTION
1 April 2024 to 30 June 2024 DOWN 4% - £1,912 a year - PREDICTION DOWN 4% - £1,820 a year - PREDICTION
1 July 2024 to 30 September 2024 DOWN 2% - £1,872 a year - PREDICTION DOWN 2% - £1,781 a year - PREDICTION
1 October 2024 to 31 December 2024 UP 3% - £1,922 a year - PREDICTION UP 3% - £1,825 a year - PREDICTION

Note, Ofgem’s current typical use figures are 2,900kWh for electricity and 12,000kWh of gas. From October this typical use figure will fall slightly to 2,700 kWh for electricity and 11,500kWh for gas as it now thinks the average household uses less, so annual prices may look cheaper than they are in reality when the new figures are used. 

Should I switch energy tariffs?

The energy price cap only applies to standard variable tariffs offered by energy suppliers. These are the tariffs that you move onto once your initial fixed or variable tariff has come to an end. As suppliers pulled their fixed tariffs when the energy crisis hit, most of us are on these tariffs now.

The prices in the table above are for the price cap, but we have to hope if wholesale prices fall further, there may be cheaper fixed deals on the market to switch to that undercut the price cap levels.

It’s worth keeping an eye on our energy comparison page for info on what deals are out there as we are finally starting to see a handful of suppliers launching fixed tariffs.

Most are for existing customers only – so do check with your supplier first to see what it is offering – but E.on Next is offering the cheapest energy deal on the market for new and existing dual-fuel customers. Its one-year fixed tariff is 2% cheaper than the current energy price cap, but will become more expensive when the cap drops from 1 October. 

The benefit of fixed tariffs is they offer greater certainty over your repayments, since you know exactly what your gas and electricity rates will be each month for a year. It’s not a straightforward decision, however.

As the energy price cap change every three months, if it was to fall, it may be that you spend more through a fixed tariff than you would have done if you had stayed put as you’d be locked into a pricier fix with high exit fees.

We’ve full pros and cons of switching in Should I fix my energy?. And if you’re ready to switch, take a look at the fixed tariffs available via our sister site, Go.Compare.

And remember to look beyond the initial quote and instead compare unit cost for gas and electricity, as well as the standing charge. That way, you can compare it to what you’re currently paying and get a more informed idea of what your bills are likely to be if you switch.

Can I get help with energy bills?

While it’s positive that energy bills look to be getting cheaper, they remain incredibly expensive. As a result, there will be a large number of households that are struggling to pay them.

The good news is that there is help available. Individual energy suppliers have hardship funds on offer which could provide some breathing space. Our help with energy costs article has rounded up all the support available and what you need to do if you’re struggling to pay your energy bill.

Ultimately, the biggest influence on the size of your energy bills will be your own usage, so finding ways to reduce that usage is a good idea. Check out our guide for ways to reduce your energy bills.

Why are energy bills so high?

There are a few reasons for high energy bills but it is mainly driven by Russia’s squeeze on gas supplies to Europe.

Russia’s invasion of Ukraine in February 2022 led to cuts in gas supplies to Europe. This resulted in European natural gas prices soaring as the region scrambled to find alternative sources for their gas needs.

Britain actually only ever depended on Russia for a small percentage of its gas. But it’s still connected by pipeline to the wider European market and Europe depends on Russia for around 40% of its gas supplies. It means that British energy suppliers pay a similar price to energy suppliers in Europe.

Price rises have been astronomical. For example, at the start of 2021, UK gas was at 38p per therm. In August 2022 it went up to 537p per therm.

As a result, dozens of UK energy suppliers went bust in 2021.

UK households have the added disadvantage of mostly having homes heated by gas boilers (85% of homes compared to fewer than 50% in France and Germany) and around 40% of our electricity is generated by gas-fired power plants.