British industrial electricity prices are 80% higher than the EU average. That is not a statistic from a think-tank report, it is the finding of a survey published this week by the Energy Intensive Users Group, as reported by The Guardian. The group warns that without relief, Britain faces deindustrialisation. That is a word governments usually reserve for steel towns and coal pits. It is now being used for the whole national energy system.
Why household bills are stuck
The same wholesale gas and electricity markets that punish factories punish homes. Ofgem’s price cap for a typical dual-fuel household is £1,738 a year from January 2025, down from the 2023 peak but still 40% above pre-crisis levels. The cap is driven by wholesale costs that are set in European markets but amplified by UK-specific charges: network costs, policy levies, and the cost of maintaining gas storage that barely exists. Every pound a steel works pays in extra electricity cost is a pound that could have been spent on insulation or a heat pump. The link is direct.
Who qualifies, and who doesn’t
Homeowners looking to escape high bills have three main grant routes. The Boiler Upgrade Scheme offers £7,500 towards an air-source heat pump. The Great British Insulation Scheme covers cavity wall and loft insulation for low-income households and those in the least efficient homes (EPC bands D to G). The ECO4 programme targets the fuel-poor with full fabric upgrades. But each has gaps: the Boiler Upgrade Scheme does not cover the cost of radiators or hot water cylinders, and ECO4 requires a benefits check. A typical 3-bed semi needing cavity wall insulation, loft top-up, and a heat pump could still face £5,000–£10,000 in top-up costs.
What this misses, the electricity-to-gas price ratio
The catch is that even with a grant, running a heat pump is not yet cheaper than a gas boiler. UK electricity costs roughly 3.2 times as much per kWh as gas, whereas a heat pump needs to be only 2.5 times more efficient to break even. In well-insulated homes it can be, but in a draughty Victorian terrace the savings vanish. The Energy Systems Catapult has shown that lowering the electricity-to-gas price ratio to 2:1 would make heat pumps cheaper for 80% of homes. That requires cutting policy costs from electricity bills, about £150 a year per household, and shifting them to general taxation or gas bills. The government has consulted on this but not acted.
What to do and by when
Households on standard variable tariffs can check eligibility for the Great British Insulation Scheme through gov.uk. Applications for the Boiler Upgrade Scheme are open until March 2027, but installers are booked weeks ahead. For those who can afford the upfront cost, solar panels (typically £5,000–£7,000 for a 3-bed semi) cut electricity bills by 40–60% and pay back in 8–12 years at current prices. The real fix, lower wholesale costs and a fairer electricity-to-gas price ratio, needs the government to act on grid connections and policy levies. Until it does, the gap between what industry pays and what homes pay will keep both groups cold.
Frequently Asked Questions
Not necessarily. The £7,500 grant covers the heat pump but not insulation or radiator upgrades. Without good insulation, a heat pump may cost more to run than a gas boiler. Check if you qualify for the Great British Insulation Scheme first.
The UK has higher network charges, more policy levies on electricity (to fund renewables and social schemes), and less interconnection than some EU countries. A lower electricity-to-gas price ratio would help, but the government has not yet reformed the system.
