Electricity in Britain now costs 24.5p per kWh, nearly four times the 6.5p for gas. That gap is the single biggest obstacle to putting a heat pump in your home, or plugging in an electric car. And it is getting wider.
As reported by Solar Power Portal, the UK’s ‘cripplingly high’ electricity price is the main barrier to electrification. The article cites industry figures showing that without a carbon tax on gas or a reduction in electricity levies, the payback on heat pumps stretches beyond 15 years for most households.
Why electricity is so expensive, and gas so cheap
The UK electricity price is built on a bad policy choice. About 25% of the typical household bill, roughly £180 a year, comes from ‘policy costs’ that fund renewable subsidies, social schemes, and energy efficiency programmes. These costs are loaded onto electricity, not gas. Gas gets a much lighter levy, and pays no carbon tax at the point of use. The result: a heat pump that uses 4,000 kWh of electricity to heat a 3-bed semi costs about £980 a year to run. A gas boiler burning 12,000 kWh costs just £780. The ‘efficient’ heat pump costs more.
Ofgem knows this. The regulator’s own data shows that the ratio of electricity to gas prices has risen from 2.5:1 in 2010 to 3.7:1 today. The government’s Net Zero Review, published in January 2023, recommended shifting the levies from electricity to gas. Nothing has happened.
What this means for your home and EPC
For a homeowner looking to improve their EPC rating from D to B or C, the standard route is: insulate the loft, install a heat pump, add solar panels. But the heat pump only makes financial sense if you also generate your own electricity. A typical 4 kW solar system with a 5 kWh battery can cut your imported electricity by 60-70%, bringing your effective cost per kWh down to around 8-10p, below the gas price. Without solar, the heat pump is a loss-making upgrade.
The Energy Saving Trust estimates that a semi-detached home with a heat pump and solar panels can save £350-£450 a year compared to a gas boiler, once the solar is factored in. Without solar, the same home loses £200 a year. The EPC calculation, which uses standardised fuel prices, currently gives a heat pump home a higher rating, but only because it assumes the lower carbon cost, not the actual running cost. That is a fiction that will not survive a winter of high bills.
Who pays for the grid, and who should
The catch is that network charges, the cost of maintaining the wires and transformers, are also loaded onto electricity. Ofgem’s latest price cap breakdown shows that network costs add 10.8p per kWh to electricity, versus 2.1p for gas. That is not a policy choice; it is physics. Electricity needs thicker cables and more substations. But the imbalance is made worse by the fact that gas networks are largely paid for via standing charges, not unit rates.
The government’s ‘Powering Up Britain’ strategy, published in March 2023, promised a review of network charging. The review is still ongoing. Meanwhile, households that switch to a heat pump or EV see their standing charge rise by about £30 a year, because they draw more power at peak times. The message is clear: the grid is not ready for mass electrification, and the price signal says ‘don’t do it’.
What you can do now
For homeowners, the rational response is to electrify only what you can generate yourself. That means solar panels first, then a battery, then a heat pump. The Boiler Upgrade Scheme (BUS) gives you £7,500 off a heat pump, but you still need the solar to make the running costs work. The Smart Export Guarantee (SEG) pays you for excess solar power, but at rates as low as 4p per kWh, less than a quarter of what you pay to import. A battery lets you store your own power and use it at night, bypassing the grid’s peak rates.
If you are on a standard variable tariff, check whether your supplier offers a time-of-use tariff like Octopus Flux or EDF’s GoElectric. These can cut your off-peak electricity price to 10-15p per kWh, making heat pump running costs competitive with gas. But the big fix, moving policy costs from electricity to gas, requires government action. Write to your MP. The Climate Change Committee has been calling for this since 2019. The longer it takes, the more households will stick with gas.
Frequently Asked Questions
Not under current prices. A heat pump running on grid electricity at 24.5p/kWh costs about 20% more to run than a gas boiler. You need solar panels and a battery to bring your effective electricity cost below the gas price.
About 25% of your electricity bill goes to policy costs, renewable subsidies, social schemes, and efficiency programmes, that are not applied to gas. Network charges are also higher for electricity. The government has promised to review this but has not yet acted.
