Will Energy Prices Go Down?

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31 May 2024

Energy prices have been a hot topic of discussion in recent years, with fluctuations in the market causing concerns for households and businesses alike. As we navigate through an ever-changing landscape, it's natural to wonder, will energy prices go down in the UK?

In this insight, we'll delve into the factors influencing energy prices, discuss recent developments, and explore predictions for the future.

Key Takeaways

  • Recent energy prices have experienced fluctuations, with a glimpse of reduction. However, long-term energy price predictions remain uncertain due to global events and market dynamics.
  • Beyond energy consumption, factors such as wholesale energy prices, delivery costs, and supplier expenses affect what consumers pay. The cost of wholesale energy significantly influences the final price.
  • Recent energy prices exhibited considerable volatility, partly attributed to factors like the disruption of gas supplies from Russia's invasion of Ukraine and increased energy demand post-pandemic. However, there's been a notable decrease in wholesale energy prices in recent months, contributing to cost relief.
  • An energy price cap by Ofgem serves as consumer protection, leading to reduced energy bills for many UK households. Though prices are dropping, individual consumption patterns still affect actual costs. Consumers should keep an eye on the evolving energy market and explore fixed tariff options when competitive deals arise. Energy prices are anticipated to gradually decrease, but long-term stability remains uncertain.

Will Energy Prices Go Down?

Yes, there have been recent decreases in energy prices. However, it's important to know that predicting long-term trends in energy costs is tricky because of global events and market changes. While prices may gradually go down, there could be temporary increases in early 2024 due to supply issues.

Understanding Energy Prices

To comprehend how energy prices work, we need to consider various factors beyond the amount of electricity we consume. Understanding energy prices is like shopping online. It's not just about the product itself (gas and electricity), but also the additional costs, like shipping fees and seller expenses. Similarly, energy costs involve more than usage; they consider wholesale energy prices, delivery costs, and supplier expenses. Among these, wholesale energy prices have a significant impact on the final price you pay for energy.

Recent Trends in Energy Prices

The past year has witnessed significant volatility in energy prices, driven by a multitude of factors. Following Russia's invasion of Ukraine, gas supplies to Europe were disrupted, leading to a surge in prices. Additionally, the lifting of pandemic lockdown restrictions resulted in increased energy demand from various sectors. These combined circumstances pushed gas and electricity prices to record highs.

However, there is some respite on the horizon. Recent months have seen a notable decrease in wholesale energy prices, with gas and electricity prices dropping by approximately 85% and 80% respectively in the first half of 2023. This decrease can be attributed to factors such as reduced demand for gas in the UK, favourable wind speeds for electricity generation, and improved gas storage capabilities.

The Impact on Household Energy Bills

The energy price cap, implemented by Ofgem, serves as a safeguard for consumers, limiting how much suppliers can charge for each unit of energy. From 1 October, millions of households in the UK will experience a drop in their energy bills, as the price cap has been reduced. A typical dual-fuel household can expect to pay around £1,923 per year between October and December, down from £2,074 in the previous period.

It's important to note that the calculations for a "typical" household are based on average usage. Actual energy costs will vary depending on individual consumption patterns and the specific characteristics of each household. Despite the decrease in prices, it's worth highlighting that the cost per unit of energy remains approximately double what it was two years ago.

Fixing Energy Prices: Pros and Cons

Given the volatility in energy prices, many consumers are considering fixing their energy prices to gain stability and potentially save money. However, it's crucial to carefully evaluate the options before making a decision.

Business Energy

For businesses, fixing energy prices can result in substantial savings. Comparing business electricity and gas prices, and considering fixed-rate tariffs, is a prudent approach. By securing a fixed deal, businesses can mitigate the impact of fluctuating prices and ensure greater predictability in their energy expenses.

Home Energy

For households, fixing energy prices until 2024 may not be feasible at this stage. While a few suppliers currently offer fixed tariffs that are slightly cheaper than the price cap, better offerings are expected in the market towards the end of 2023. It's advisable to monitor the market closely and explore fixed tariff options when more competitive deals become available.

The Future of Energy Prices

The future of energy prices is a topic of significant concern and speculation as the world grapples with an evolving energy landscape. Several key factors will shape the trajectory of energy costs in the coming years.

One of the primary influences on future energy prices is the transition to renewable energy sources. As countries strive to reduce carbon emissions and combat climate change, they are increasingly investing in renewable technologies such as wind, solar, and hydroelectric power. The continued growth of renewables is expected to drive down the cost of energy production, making clean energy sources more affordable and accessible.

Technological advancements also play a crucial role in shaping energy prices. Breakthroughs in energy storage, grid management, and energy-efficient technologies are expected to increase the overall efficiency of energy systems. This, in turn, can lead to cost savings that are passed on to consumers.

Support for Energy Bills

Recognising the financial strain faced by households, various initiatives have been implemented to provide support for energy bills. Last year, the government offered a £400 discount on energy bills to all households in England, Wales, and Scotland. However, this discount is not being repeated. Instead, support is now targeted towards vulnerable households, with cost-of-living payments for those on means-tested benefits, pensioners, and disabled individuals.

Additionally, the government has invested in energy-saving awareness campaigns aimed at helping households reduce their energy consumption and lower their bills. Charities and suppliers are advocating for the creation of a social energy tariff, which would offer subsidized rates to low-income and vulnerable households.


In conclusion, while energy prices are expected to decrease in the coming months, the long-term outlook remains uncertain. Fixing energy prices can provide stability and potential savings for businesses, but households may need to wait for more competitive fixed tariffs to become available. Monitoring market trends and exploring options when they arise is crucial. Government support initiatives are in place to assist vulnerable households, but it is essential to remain mindful of energy consumption and seek out energy-saving opportunities.

As we navigate the complex landscape of energy pricing, staying informed and making informed choices is key. By understanding the factors influencing energy prices, monitoring market developments, and exploring available options, consumers can navigate the energy market with greater confidence and make decisions that best suit their needs and budget.


Stuart is an expert in Property, Money, Banking & Finance, having worked in retail and investment banking for 10+ years before founding Sunny Avenue. Stuart has spent his career studying finance. He holds qualifications in financial studies, mortgage advice & practice, banking operations, dealing & financial markets, derivatives, securities & investments.

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