Should I Fix My Energy Prices Until 2025?

In 2023, we’ve witnessed a consistent decline in wholesale gas and electricity prices following the record highs experienced earlier in the year. In April 2022, the Energy Bill Discount Scheme (EBDS) was launched by the UK government, superseding the previous Energy Bill Relief Scheme (EBRS).

This new scheme aims to provide reduced-level support for businesses and other non-domestic customers. This has prompted many businesses to contemplate the value of securing a fixed business or domestic energy deal for 2025.

Our recommendation is if a better deal is available, it’s advisable to opt for a fixed energy tariff. Despite the decline in wholesale market prices, they remain significantly higher and are anticipated to rise in 2025.

The persisting challenges in energy security contribute to the volatility of the wholesale energy market, where prices can fluctuate daily. By fixing the amount of money you pay, you can safeguard yourself or your business against potential future price hikes.

Should I Fix My Energy Prices Until 2025?

Why are energy prices so high?

Throughout 2023, wholesale energy prices have experienced a decline, providing some relief to households and businesses across the UK. However, it’s essential to acknowledge that they remain higher than pre-energy crisis levels. Let’s review the key factors contributing to this increase:

  • The invasion of Ukraine by Russia led Germany to suspend the transit of gas via the Nord Stream 2 pipeline. This pipeline, designed to double the annual capacity of Nord Stream 1 from 55 billion cubic meters (BCM) to 110 BCM, was impacted significantly.
  • Russia took further measures by reducing the capacity of the Nord Stream 1 pipeline to 20% before completely ceasing the supply. Considering that Russia typically provides about 40% of Europe’s natural gas, this had a substantial impact.
  • Recent updates confirm that this is when all reforms will start. All TNUoS charges will increase.
  • Europe faced an exceptionally harsh winter, with freezing conditions in northern and central Europe. This led to a surge in gas usage and depletion of natural gas storage supplies.
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