Gas and electricity price forecast 2026
Gas and electricity prices forecast 2026
In 2026, gas and electricity prices were expected to be lower than in 2025. However, with the conflict in the Middle East, wholesale gas prices have spiked and this could filter through to customers' bills if the conflict continues.
2021 energy crisis
Since the introduction of Ofgem's energy price cap in January 2019, most suppliers have based energy prices of their standard variable rate tariffs on the unit rates capped by the price cap.
In September 2021, the price of wholesale energy rose to a point where it became untenable for suppliers to keep offering deals at the rates they had been. This meant that the prices of fixed energy deals soared to the point that most of them became much more expensive than the capped standard variable tariffs, even at the then price cap level of £1,277. Prices later stabilised but remained much higher than they were before the crisis.
Government energy bill reductions in 2026
The price cap rose by 0.2% from £1,755 to £1,758 for the period from 1 January to 31 March 2026.
However, the government pledged to bring down bills by an average of £150 in April as part of its autumn budget. This means the next price cap, which runs from 1 April to 30 June, has been set at £1,641.
This is connected to wholesale energy prices, which have decreased slightly over the past three months, but also to green levies and costs related to energy efficiency schemes that are being removed from customers' bills. This filters through into a reduction in unit rates for electricity and gas, meaning that those whose energy usage is higher will likely save more, and vice versa.
Conflict in the Middle East
Three days after the price cap was announced on 25 February, the United States and Israel conducted missile strikes on Iran, which has led to a spike in wholesale gas prices. Energy tariff prices have gone up as a result.
While the next price cap drop is locked in, the next one could increase significantly as a result of these wholesale spikes - but it depends on how long the conflict continues. If it ends relatively quickly, its effect on energy prices will be reduced.
Are energy prices going down?
Given the energy market volatility discussed above, it's difficult to make any predictions about energy prices. It's best to stay as close as possible to market developments so you have the most up-to-date information.
Here are the latest predictions according to British Gas.
| Price cap level | Annual energy cost for an average usage medium-sized household paying by Direct Debit |
|---|---|
| 1st July to 30th September (2024) | £1,568 |
| 1st October to 31st December (2024) | £1,717 |
| 1st January to 31st March (2025) | £1,738 |
| 1st April to 30th June (2025) | £1,849 |
| 1st July to 30th September (2025) | £1,720 |
| 1st October to 31st December (2025) | £1,755 |
| 1st January to 31st March (2026) | £1,758 |
| 1st April to 30th June (2026) | £1,641 |
| 1st July to 30th September (2026) (British Gas prediction) | £1,780 |
What's the average UK energy bill?
There's no such thing as an "average" UK energy bill because everyone's unit rates and standing charges will differ slightly (by plan and by region), and everyone's energy usage is different.
For the price cap that runs from 1 January to 31 March 2026, average UK energy bills look like this. You can see how the medium annual dual fuel bill comes to £1,757.50, which is then rounded up to £1,758 and becomes the price cap figure reported when it changes.
| Number of bedrooms | Gas usage (kWh) | Electricity usage (kWh) | Estimated average annual dual fuel energy bill | Estimated average monthly dual fuel energy bill | |
|---|---|---|---|---|---|
| Low | 1-2 | 7,500 | 1,800 | £1,271.09 | £105.92 |
| Medium | 3-4 | 11,500 | 2,700 | £1,757.50 | £146.46 |
| High | 5+ | 17,000 | 4,100 | £2,471.31 | £205.94 |
Estimated bill calculated by multiplying the kWh usage by the current average unit rates and adding current average standing charges:
- 5.93p per kWh for gas
- 35.09p per day for gas standing charge (£128.08 per year)
- 27.69p per kWh for electricity
- 54.75p per day for electricity standing charge (£199.84 per year)
What are the average UK energy unit rates and standing charges?
For the price cap that runs from 1 January to 31 March 2026, the average unit rates and standing charges are:
| Electricity | Gas | |
|---|---|---|
| Unit rates | 27.69p per kWh | 5.93p per kWh |
| Standing charge | 54.75p per day | 35.09p per day |
For the price cap that runs from 1 April to 30 June 2026, the average unit rates and standing charges will be:
| Electricity | Gas | |
|---|---|---|
| Unit rates | 24.67p per kWh | 5.74p per kWh |
| Standing charge | 57.21p per day | 29.09p per day |
Why are energy prices so high?
Several factors can cause suppliers' gas and electricity prices to go up or down, but it usually comes down to the wholesale price of gas. This is because the UK is more dependent on gas imports than on generating its own energy, which means it is more susceptible to wholesale price changes than other countries.
Factors such as global conflicts affect the price of gas
Wars in oil-rich countries and conflicts between countries over gas pipelines can impact wholesale prices. For example, wholesale gas prices in the UK are spiking in 2026 because of the US/Israel-Iran conflict. In the past, temporary spikes have also been triggered by industrial action at power plants and fuel transport issues.
Importantly, while these spikes affect energy bills, they don't usually affect the supply of gas and electricity, which has remained constant in the UK throughout these conflicts.
The UK is reliant on gas, which also sets the price of electricity
The majority of households across the UK still use gas to heat their homes, so there is still high demand for it.
However, the UK electricity pricing market is dictated by the cost of the most expensive electricity generation method - because gas-fired power plants generate much of the UK's electricity, gas sets the price of electricity 98% of the time.
Other countries don't have this problem - France, for example, gets most of its power from nuclear sources, so gas only sets its electricity pricing 7% of the time.
How can we make energy cheaper?
Reducing energy bills is a key priority for the government. Two of the main things it's looking at are:
- Reduce the UK reliance on gas by finding alternative ways for customers to heat their homes via technology like heat pumps
- Make more of renewable energy - while the UK is good at generating wind and solar energy, it's less good at storing it to take up the slack when needed.
Is it worth comparing gas and electric prices?
Yes - if you're on a standard variable tariff, you can almost certainly make savings by switching to a fixed deal.
It's a good idea to run an energy comparison to see what's available (whether you decide to switch to a fixed deal or stay on a standard variable tariff). There are deals available which could save around £200 based on the current price cap, which would then save even more if the price cap goes up in the next few months.
Otherwise, the best option is to try and manage energy usage around the home in order to keep bills as low as possible. Uswitch's mobile app can help.
I've never switched energy before - how does it work?
It's a simple process to switch energy supplier. Here's what you need to hand:
- Your postcode
- Your plan name.
That's it! We'll do the rest, including comparing top deals in your area, and providing savings figures, customer ratings, and the ability to filter by preferences including green plans and more.
For step-by-step instructions on how to switch energy suppliers after a price rise, read our dedicated guide about how to switch supplier for gas and electricity here.
Run an energy comparison
Click here to compare energy prices and get started on your energy switch.
