Energy regulator Ofgem has confirmed that the UK energy price cap will rise by 13% from 1 July 2026, bringing another unwelcome increase to household energy bills across the country. If you're on a standard variable tariff, here's everything you need to know - and what your options are.
What Is the Energy Price Cap?
The energy price cap is the maximum rate per unit of energy, and the maximum daily standing charge, that suppliers can charge customers who haven't signed up to a fixed-rate deal. It's reviewed every three months by Ofgem based on wholesale energy market conditions.
Importantly, the cap doesn't limit your total bill , it limits the rate you pay per unit. So the more energy you use, the more you'll spend.
What's Changing in July 2026?
From 1 July to 30 September 2026, the energy price cap will increase by 13%. Here's what that looks like in real terms:
- The typical annual household bill (based on average usage) will rise to approximately £1,862, up from the current £1,641.
- That works out to roughly £18 more per month for a household using both gas and electricity.
- Wholesale gas prices have risen by around 28% over the past three months, driven largely by ongoing conflict in the Middle East.
Despite the increase, it's worth noting that bills remain well below the peak of the 2022 energy crisis, when the government intervened to limit bills at £2,500. Current prices are around 54% lower than that peak.
Gas vs Electricity: The Price Rise Isn't Equal
One of the more notable aspects of this quarter's change is that electricity prices are rising by less than gas. Electricity bills are expected to go up by around 5%, while gas bills are rising by approximately 24%.
This reflects the growing contribution of renewable energy to the UK grid. More solar, wind, and other renewables means less reliance on gas-fired power stations - which is helping to partially insulate electricity prices from global gas market volatility.
Ofgem has also updated the Typical Domestic Consumption Values (TDCV) used to calculate the cap, reflecting the fact that households are now using around 7% less electricity and 17% less gas than in the previous review period. This is largely thanks to improved energy efficiency, warmer winters, and behaviour changes driven by higher prices in recent years.
Who Is Affected?
Around 33 million domestic accounts are on standard variable tariffs and will see this increase. However, roughly 21 million accounts are currently on fixed-rate deals and will be unaffected by this change - at least until their fix ends.
What Can You Do to Reduce the Impact?
There are several practical steps households can take right now:
- Switch to a fixed tariff. If you're on a standard variable deal, shopping around for a fixed-rate tariff could provide certainty over your bills for the next year or two. With prices volatile, locking in a rate can be a sensible move - though it's worth checking the market carefully before committing.
- Switch to direct debit. Paying by standard credit rather than direct debit typically costs around £143 more per year. If you're not already on direct debit, switching is a simple saving.
- Get a smart meter. Smart meter customers can access time-of-use tariffs, including deals that offer significantly cheaper electricity at off-peak times - some suppliers are currently offering half-price electricity at weekends. Ofgem CEO Tim Jarvis specifically highlighted this as a way for households to manage costs.
- Contact your supplier if you're struggling. Suppliers are required to support customers who are finding it difficult to pay. This can include tailored repayment plans, help accessing financial assistance, and routes to debt advice. The earlier you get in touch, the more options are available.
Why Are Energy Prices So Volatile?
The UK's exposure to global wholesale gas markets is at the heart of the problem. Because a large proportion of the country's electricity is still generated using gas, international events - conflicts, supply disruptions, seasonal demand spikes - have a direct and rapid impact on what households pay.
Ofgem has been clear that the long-term solution lies in reducing that dependency. As Ofgem CEO Tim Jarvis stated, building a clean energy system is the best way to move away from markets beyond our control and deliver a more secure and stable energy system for consumers.
The good news is that this transition is already having an effect. The fact that electricity prices are rising by far less than gas this quarter is a direct result of renewable generation growth on the UK grid.
Could Generating Your Own Electricity Help?
For homeowners thinking about their long-term energy costs, it's worth understanding how generating your own electricity changes the picture entirely.
Solar panels generate free electricity from daylight - electricity that would otherwise be bought from the grid at the cap rate. Every unit of solar-generated power used in the home is a unit that isn't being purchased from a supplier. When paired with battery storage, households can also hold onto energy generated during the day and use it in the evenings, maximising self-consumption and reducing grid dependency further.
The relationship between grid prices and the value of self-generated electricity is direct: as the price cap rises, each unit of free solar energy is worth proportionally more.
There's also the Smart Export Guarantee (SEG) to consider - a government-backed scheme that requires licensed energy suppliers to pay households for surplus electricity exported back to the grid. So energy generated but not used at home can still generate an income rather than going to waste.
Whether solar makes sense for a particular property depends on a range of factors - roof orientation, shading, energy usage patterns, and upfront costs among them. It is worth researching carefully and getting an assessment from a qualified installer before making any decisions.
Looking Ahead
The next price cap review will be announced ahead of October 2026. Ofgem is also currently consulting on how the government's forthcoming Bill Discount Scheme will be reflected in the cap from that period.
For households on variable tariffs, July is likely to be a noticeable change. Taking the time now to review your tariff, check your payment method, and understand your options is time well spent.
Fit Solar are MCS-certified solar panel and battery storage installers based in Stroud, serving homes and businesses across the Cotswolds and surrounding areas. For information about solar panel installations, contact us or call 01453 705915.
