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What's next for the energy market?
From standing charges to zonal pricing, here's what to look out for if you're an energy customer in the UK, including price predictions and proposed changes
The last few years have been eventful for energy customers in the UK. Though it’s impossible to know with complete certainty how the landscape will change into the future, we can predict a few possibilities.
After the energy crisis of 2021 resulted in skyrocketing utility bills and the shuttering of several providers, almost all households were forced onto rollercoaster variable tariffs. Prices are still considerably higher than they ever were before the crisis began.
An Ofgem announcement on 23 May 2025 revealed that the energy price cap will drop by 7% on 1 July, after an unwelcome increase in April. This puts the cap for a typical medium-use household at £1,720, or £143 a month. It's still 9% higher (£152 more per year) than the price cap set for the same period last year, from 1 July to 30 September 2024, which was £1,568.
Experts think it's unlikely that we'll see any huge decreases in energy prices in the short-to-mid term, and early predictions suggest prices will remain at a similar level into the October-December 2025 price cap period.
After four unstable years, the best-case scenario for the foreseeable future would be an extended period of predictability.
We've summarised expert opinions and energy market predictions, to give you an idea of what might be coming down the line.
Plus, we've rounded up the government and regulatory measures on the horizon that could shake up the energy industry and affect your bills.
Looking to fix a deal? See the latest table of available energy tariffs in our guide to how to get the best energy deal.
Energy costs in 2025
Historically, energy prices tend to fall in the spring and early summer as temperatures rise and energy consumption decreases.
But this year, a cold, windless winter across Europe meant that many countries had to rely on more gas than expected. Gas storage levels dropped, causing prices to rise. Customers banking on some energy bill relief were left disappointed by a 6.4% rise in the energy price cap on 1 April. The cap will drop by 7% in July.
Read more: What is the energy price cap?
The UK is sensitive to wholesale global gas prices, as around a third of our electricity is generated from gas, and the majority of that gas supply is imported from other countries. This is why the drive for domestic renewable energy production is crucial, not just from an environmental perspective but also as a means of controlling energy bills.
Dr Craig Lowrey, principal consultant at market analytics firm Cornwall Insight, said: ‘Ultimately, if we want to reduce energy bills substantially and sustainably, we need to reduce our reliance on imported gas, through increasing the number of reliable renewables on the grid.’
In the lead-up to the 2024 general election, Labour suggested that its net-zero manifesto policies would cut energy bills by up to £300. It has since reaffirmed this commitment, but such changes will take a long time to manifest – little comfort for consumers dealing with high prices in the short term.
How to save on energy: 10 ways to cut your energy bills
This year, prices will drop by 7% in July. Typically, energy prices often rise in the autumn and winter months, though early predictions so far suggest that Autumn 2025's price cap could see rates remain relatively stable. This means the summer months may well prove to be a good time to fix in a 12-month deal, if you find one that's cheaper than the price cap.
Zero-standing charge tariffs
In recent months, there’s been a great deal of debate about the merits of no-standing charge tariffs. Ofgem is currently running a consultation on this type of tariff; it is likely that by winter 2025/26, every provider will be required to offer at least one tariff that does not include standing charges.
To make up for the lack of a daily standing charge, those tariff are likely to have a higher rate for each unit of electricity and gas used. So while they could be a good option for those who use little to no energy over long periods, higher unit rates may mean they aren't cost effective for those with typical energy use.
If you're looking into a zero standing charge tariff, you'll need to weigh up how much you could expect to pay on it compared to a typical tariff.
Read more on types of energy tariff
Zonal energy pricing
Currently, all energy customers in the UK pay roughly the same amount for electricity. There are variations between regions, but these are often differences of less than a penny per kWh.
The UK government is considering a zonal pricing model for the energy market. This process would divide the UK into several regions where the price of electricity would be determined by supply and demand. Households in areas with large amounts of renewable energy generation but low usage, such as parts of Scotland, would pay less than those in areas with high demand and little renewable energy generation, like London.
The issue of zonal pricing is divisive, with various energy providers taking different sides of the debate. While we are still some way from a final decision, it's something that could shake up the way we think about energy pricing down the line.
Renewables, heat pumps and specialist tariffs
Customers with solar panels, heat pumps or EVs currently have several specialist tariffs available on the market that can make that technology much cheaper to run. Specialist tariffs can reduce EV charging costs, offer heat pump customers cheaper rates at certain times of day, and pay solar customers money to feed their excess electricity back into the national grid.
EV tariffs can be fixed or variable and charge lower rates for electricity at specific times of day. Generally, the lower rates are overnight when you’re more likely to be charging your car. While there are some exceptions, the majority of EV tariffs require a smart meter. Many of these tariffs will only work with a compatible smart charger that connects to the smart meter and turns on automatically during off-peak times and off again when rates are higher.
For current or future heat pump owners, many providers are now offering tariffs for heat-pump owners that also offer cheaper electricity rates at different times of day.
Unlike EV tariffs that charge a cheaper rate in one chunk overnight, most heat pump tariffs charge a cheaper rate for two and three off-peak periods over 24 hours.
Our guide to heat pump costs includes a calculator that shows what you could expect to pay for your annual heating bill if you were to install a heat pump, showing the difference between different tariffs on the market.
Read more: air source heat pump costs and savings
Finally, solar panel owners can take advantage of the Smart Export Guarantee (SEG), which allows customers to be paid for the energy they feed into the grid using their solar PV panels or wind turbines. SEG rates vary widely, but on average, solar panel owners are still receiving far less for their exported electricity than companies charge to supply it.
One exception to this is Octopus's Intelligent Octopus Flux tariff, which is a smart time-of-use tariff with peak and off-peak pricing, where import and export rates always match.
Read more about Smart Export Guarantee rates: the best SEG tariffs for solar panel owners
Net zero and energy efficiency
To achieve a government ambition of net-zero national carbon emissions, millions of homeowners will need to take steps to make their homes more sustainable and energy-efficient.
Making your home more energy efficient won’t just help cut your carbon footprint; it’s also one of the most effective steps you can take to lower your energy bills. Electricity and gas prices are likely to remain higher than they were before the energy crisis for the foreseeable future.
Depending on your budget, adding new tech such as solar panels or heat pumps, improving your insulation or installing underfloor heating are all steps you can take to limit your monthly energy charges and minimise your carbon footprint.
We've built a tool you can use to find out how your own home could best be improved, including how much it would cost and what you could expect to save. Get started with our home energy planning service for a more efficient home.
