Energy Prices - What does the future hold?
There may be some good news for those looking to keep their energy bills low, as experts predict a sharp decrease in energy prices in the latter half of the year. Cornwall Insight forecasts that the average typical household energy bill for Q3 (July-September) could be £2,024, which is 19% below the government's Energy Price Guarantee. Furthermore, Q4 (October-December) energy bills could be around £2,076 for an average household based on typical usage, which is still 17% lower than the Energy Price Guarantee. Investec predicts that Ofgem's energy price cap could be set at £1,981 for Q3 and £1,966 in Q4.
It's important to note that these predictions reflect a fall in wholesale energy prices, but energy markets can be volatile, and another increase in gas prices could nullify these projections. While the Energy Price Guarantee has helped keep costs down by freezing the unit costs for gas and electricity, it does not directly apply to bills, and Ofgem sets the energy price cap.
It's important to remember that although the energy market outlook has improved considerably from last year, with a mild winter and higher storage levels in Europe leading to significant falls in wholesale rates, energy prices can still be very volatile, and prices can change on a daily basis. The experts' new predictions are not a sign that the problems in the energy market have been resolved, but rather an indication that there is a need to implement an energy system that prevents the market highs that caused hardship in the past.
It's worth noting that the UK has the world's sixth highest energy prices per kilowatt, almost double the European average of 23p, according to research by The Underfloor Heating Store. David Johnson, Technical and Category Manager at the store, believes this is due to around 85% of households relying on gas boilers to heat their homes, and approximately 40% of electricity still being generated at gas-fired stations.
While a fall in energy prices may seem like a cause for celebration, it's important to approach these projections with caution. A sudden increase in energy demand or geopolitical tensions could cause energy prices to surge.
Moreover, even if energy prices do fall, it is still important for individuals to practice energy conservation habits to keep their bills low. For instance, switching to energy-efficient light bulbs, using energy-saving appliances, and turning off devices when not in use can all make a significant difference.
In summary, while there may be some potential for lower energy prices in the second half of the year, it's important to be aware that energy markets can be volatile, and prices can change quickly. Therefore, individuals should remain vigilant and take steps to conserve energy where possible.