Fixed vs Variable Energy Tariff — Which Should You Choose in 2026?

A variable tariff — sometimes called the standard variable tariff (SVT) or default tariff — is the rate your energy supplier charges when you are not on a specific fixed deal. It is the tariff you get automatically rolled onto when a fixed deal ends, or when you move into a new property and inherit the existing supplier.

The unit rate and standing charge on a variable tariff can go up or down, usually in line with the Ofgem energy price cap, which is reviewed and updated every quarter (January, April, July, October).

How the Ofgem price cap works

The price cap sets the maximum amount a supplier can charge per unit of gas and electricity, plus the maximum standing charge, for customers on variable and default tariffs. It does not cap your total bill — that depends on how much energy you use.

When the price cap falls, your variable tariff rate falls with it. When it rises, your bill goes up. This means variable tariffs offer no price certainty, but you benefit immediately from any drops in wholesale energy costs.

A fixed tariff locks in the unit rate and standing charge you pay for a set period, usually 12 or 24 months. Regardless of what happens to wholesale energy prices or the Ofgem price cap during that period, your per-unit rate stays the same.

Key features of fixed tariffs

• Rate certainty: your unit rate is guaranteed for the duration. Your bill will still fluctuate with seasonal usage (you use more gas in winter), but the rate per kWh will not change.
• Exit fees: most fixed tariffs charge an early exit fee if you leave before the term ends, typically £25–£75 per fuel (so up to £150 if you have both gas and electricity). Some suppliers offer fixed deals with no exit fees.
• No mid-contract price rises: unlike variable tariffs that follow the price cap, your fixed rate cannot be increased during the contract period.
• Auto-rollover: when your fixed deal ends, you are automatically moved to your supplier’s SVT unless you actively choose a new deal.

Important: fixed does not mean cheaper

A fixed tariff simply means the rate is locked. The rate itself might be higher or lower than the current variable rate. Suppliers price fixed deals based on their prediction of future wholesale costs, so a fixed tariff often includes a risk premium — a small markup to protect the supplier if costs rise.

This means that sometimes fixing is cheaper over the term, and sometimes it is more expensive. The decision depends on where you think energy prices are heading.

Here is a side-by-side comparison of the key differences between fixed and variable energy tariffs.

Comparison based on typical UK energy tariff structures as of 2026.

Looking at the history of the Ofgem price cap helps illustrate when fixing would have saved (or cost) you money. Here are the key milestones:

EPG = Energy Price Guarantee (government intervention). Figures are Ofgem typical consumption values.

The key lesson is that the best time to fix is when prices are near the bottom of a cycle and expected to rise. The worst time to fix is when prices are peaking and about to fall. Unfortunately, predicting the bottom is difficult — which is why many advisers suggest fixing when rates are reasonable and you can lock in a rate you are comfortable with, rather than trying to time the market perfectly.

There is no universally correct answer, but here are some guidelines based on current market conditions and typical household situations:

Fix if…

• You value budget certainty. If knowing exactly what you will pay per unit of energy is important to you — for example, if you are on a tight budget — a fixed tariff removes one source of financial uncertainty.
• Fixed rates are at or below the current price cap. If suppliers are offering fixed deals cheaper than the current variable rate, fixing is a straightforward win. This occasionally happens when wholesale prices are expected to fall.
• You believe prices will rise. If geopolitical instability, cold weather forecasts, or wholesale market trends suggest rising prices, locking in now protects you from future increases.

Stay variable if…

• Prices are falling. If the price cap has been dropping quarter on quarter and analysts expect further reductions, staying on the variable tariff lets you benefit from each successive cut.
• You want maximum flexibility. Variable tariffs have no exit fees, so you can switch to a fixed deal at any point if conditions change.
• Fixed deals carry a significant premium. If the cheapest fixed tariff is notably more expensive than the current variable rate (say 5–10% higher), the risk premium may not be worth paying.

In the current market (mid-2026), the price cap has been relatively stable at around £1,700–£1,800 for several quarters. Fixed deals from competitive suppliers are pricing close to the cap level. For most households, a 12-month fix at or near the cap rate is a reasonable choice — it provides certainty without a significant premium.

Many suppliers now offer green or 100% renewable tariffs, promising that the electricity you use is matched by renewable generation (wind, solar, hydro). Some also offer green gas tariffs backed by biogas certificates or carbon offsetting.

What does a green tariff actually mean?

A green electricity tariff means your supplier purchases Renewable Energy Guarantee of Origin (REGO) certificates to match your annual consumption. One REGO certificate is issued for every megawatt-hour of renewable electricity generated in the UK. The electricity coming through your meter is still from the national grid — a mix of all sources — but your supplier’s purchasing supports renewable generation.

Do green tariffs cost more?

Not necessarily. REGO certificates are relatively cheap (a few pence per certificate), so some suppliers offer green tariffs at the same price or even cheaper than their standard offerings. However, truly impactful green tariffs — where the supplier invests directly in new renewable capacity rather than just buying certificates — may carry a small premium of £20–£50 per year.

If environmental impact matters to you, look for suppliers that are transparent about their energy sourcing and invest in new renewable generation, not just certificate trading.

When your fixed energy tariff expires, your supplier will move you onto their standard variable tariff (SVT) automatically. The SVT is almost always more expensive than the best fixed deals available, so it pays to act before your deal ends.

How to avoid overpaying

1. Note your end date. Your original welcome letter, annual statement or online account will show when your fixed deal expires.
2. Start comparing 6–8 weeks before. Most suppliers let you secure a new deal up to 60 days before your current one ends. The new tariff starts on the day your old one finishes — no gap, no SVT.
3. Consider switching supplier. Loyalty rarely pays in the energy market. The cheapest deals are almost always from competitors trying to win your business. Switching takes around 5 working days with a smart meter.
4. Submit a meter reading on the changeover date. This ensures your final bill on the old tariff is accurate and you are not charged at a higher rate for energy you used at the cheaper rate.

If you have already been rolled onto the SVT, do not worry — you can switch away at any time with no exit fees. But every day you delay is a day you are paying more than you need to.