Are UK energy prices going down in 2024?

Energy prices have fallen again this month with the new Ofgem energy price cap coming into effect. But what will happen to gas and electricity bills later in 2024?

Energy prices displayed on a smart meter
Will energy prices go down in 2024?
(Image credit: © Getty Images/iStockphoto)

Energy prices have fallen again this month, and are now at their lowest level in almost three years. But the good news looks likely to be short-lived.

The 28 million UK households sitting on the Ofgem energy price cap saw their gas and electricity bills fall by 7% on 1 July. This followed a drop of more than 12% on 1 April.

It means that, until September, the average annual bill for a home powered by a variable dual-fuel energy tariff will be around £400 a year (£33 a month) cheaper than it was at the start of 2024 at £1,568. If you're on a fixed tariff, your prices won't have changed.

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The Ofgem cap sets the maximum your energy supplier can charge you for unit rates (per kilowatt hour, or kWh) and standing charges. Your actual gas and electricity bill will depend on how much energy you use, meaning your costs could be higher or lower than the figures given by the regulator Ofgem. To ensure you pay the right amount for your energy, it's worth taking a meter reading at least once a month - or signing up for a smart meter.

While many households will be pleased to see another reduction in their bills over the summer, experts predict that energy costs may rise again this autumn and winter. We've looked at the latest predictions about where energy bills are headed.

Will energy prices go down in 2024?

According to the latest price cap predictions from energy consultancy Cornwall Insight, bills could rise significantly later in 2024. The company's analyses are respected given they have often proved to be accurate over the last three years.

With the price cap change on 1 July, Cornwall released its latest set of forecasts for the October 2024 and January 2025 caps. It said the autumn edition, which runs until 31 December, looks likely to be 10% (£155 per year) higher than the current cap at £1,723 (£144 a month).

It expects the January to March 2025 cap to be similar, although this outlook could change significantly over the coming months. The latest predictions are a slight improvement on its previous set in May, which forecast a 12% (£195 a year) hike from 1 October.

Cornwall Insight said the main reason for the rise was an uptick in wholesale prices, which have the biggest influence on the level of the cap. It pointed to "geopolitical concerns", such as the wars in Gaza and Ukraine, as well as "supply-demand pressures". The weather has also played a big role in previous cap increases and decreases.

We will find out what the October to December cap is on 27 August. It will be based on a wholesale price assessment period that runs from 17 May to 17 August.

Cost of living pinch 'coming this winter', Cornwall Insight warns

Cornwall Insight has warned that its latest set of predictions mean another cost of living squeeze is on the way.

Principal consultant, Dr Craig Lowrey, said: “The drop in forecasts for October are positive, but we need to keep this in perspective. We are still facing an average 10% increase in bills from October, and as winter approaches this will put a strain on many household finances."

Lowrey also called on the next government to work on reforming the Ofgem price cap system. He added: “While long-term solutions are being developed, it's critical to focus on immediate strategies to manage energy bills.

"Most political parties have proposed reforms to how energy bills are structured, with a review of standing charges front and centre. However any change to bills creates winners and losers, so we urge whoever is in government come 5th July to proceed with caution. Additionally, we would encourage greater discussion on other reforms, such as social tariffs, which could support the pursuit of lower bills over the following months and years.

“Looking to long-term bill reduction, we've heard pledges about investing in wind farms, solar power, nuclear energy, and other renewable infrastructure from various parties. However, concrete details on the implementation of these plans are scarce. It's essential to be transparent with the public, these initiatives require substantial investment – and therefore cost - and time to come to fruition. While renewables are the path to sustainable bill reductions, it will take a long time for households to see these changes reflected in their bills.”

Ofgem is currently consulting on the future of the energy price cap. It says the mechanism is likely to be unfit for the net zero age.

What is the long-term outlook for energy prices?

Cornwall Insight has at least delivered some potential good news for the longer term. It recently said wholesale forecast trends presented a "ray of hope" for households.

Its most recent quarterly 'Power Curve' forecast, which tracks the wholesale energy market's projected prices, estimates they will be 13% lower on average over the next 12 months. It means prices could come in 27% below the firm's last set of forecasts. This improved outlook came in the wake of the mildest European winter for five years.

The energy consultancy estimates prices will remain relatively flat over the next three years, before beginning to drop away from 2028. By then, it expects improved gas supplies to be better supported by bolstered renewable energy output.

However, it says wholesale prices are likely to remain well above averages seen from the last decade by 2031. Once inflation is taken into account, they could still be more than 10% above the most expensive prices from the late-2010s. Cornwall Insight puts this down to a continued European reliance on gas imports.

"Tight margins for renewables developers combined with commodity prices staying comparatively high, mean substantial drops are unfortunately not currently on the cards," said the consultancy's senior modeller, Tom Edwards.

“This period of relative stability does however provide a crucial window of opportunity. As we move forward, our forecasts show continued investment in renewable energy infrastructure is paramount. By diversifying our energy mix and continuing our drive for innovation, it is clear we can unlock a future where energy affordability becomes the norm, not a fleeting moment.”

How have standing charges changed?

Energy customers pay a fixed daily charge covering the costs of being connected to a supply, such as cable and substation maintenance. The amount varies depending on where you live in Great Britain.

There has been anger about charges going up - in many areas, the charge has doubled over the past two years - and the inability to reduce these fixed fees. At present, they mean you're paying around £334 a year (£369 for standard credit customers) before you've even used any energy.

In April, Ofgem hiked the amount it allows suppliers to charge due to “increasing network costs”. The regulator recently conducted a consultation into the future of standing charges and said it is reviewing more than 40,000 responses. The outcome of this review could have a major impact on energy bills. Experts predict scrapping standing charges would see prices rise significantly.

While everyone is seeing an increase in the amount they have to pay to cover the costs of the nation's energy infrastructure, Ofgem has brought standing charges for prepayment meters in line with the rest of the market.

This move means the so-called 'prepayment premium' has ended for good, saving households with this type of meter £49 a year, while slightly increasing bills for direct debit customers. The government's Energy Price Guarantee had temporarily equalised standing charges, but expired in April.

Should I fix my energy?

Since they made a comeback in July 2023, fixed energy deals have generally struggled to compete with the Ofgem energy price cap rate. However, experts have recommended that people urgently consider one ahead of the anticipated October price cap hike.

Ben Gallizzi, comparison website Uswitch's energy expert, said: "The long-term outlook still remains very uncertain and it is expected that prices will remain at a similar level in the first quarter of next year. Households should therefore avoid being lulled into a false sense of security from falling energy bills this summer, as the reprieve will be relatively short-lived.

“It’s important to prepare now for future price rises and consider locking in rates while there are competitive deals to choose from. There are plenty of 12-month fixed tariffs available that are cheaper than the predicted price cap for October, which can offer price certainty on what you’ll pay for a year and potentially help you save on your bills.”

How to keep energy bills low

To help you keep energy bills low, we have gathered some top tips in our article looking at 13 ways to reduce your energy costs. If you're interested in the best ways to improve your energy efficiency and reduce costs, we explore: radiators vs electric heaters, heated airers vs tumble dryers, and wood burning stove vs central heating.

Henry Sandercock
Staff Writer

Henry Sandercock has spent more than eight years as a journalist covering a wide variety of beats. Having studied for an MA in journalism at the University of Kent, he started his career in the garden of England as a reporter for local TV channel KMTV. 

Henry then worked at the BBC for three years as a radio producer - mostly on BBC Radio 2 with Jeremy Vine, but also on major BBC Radio 4 programmes like The World at One, PM and Broadcasting House. Switching to print media, he covered fresh foods for respected magazine The Grocer for two years. 

After moving to - a national news site run by the publisher of The Scotsman and Yorkshire Post - Henry began reporting on the cost of living crisis, becoming the title’s money editor in early 2023. He covered everything from the energy crisis to scams, and inflation. You will now find him writing for MoneyWeek. Away from work, Henry lives in Edinburgh with his partner and their whippet Whisper.

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