Industrial electricity prices in the UK are 80% higher than the EU average. That figure, buried in a CBI submission to the Treasury last week, should worry every homeowner who pays a gas or electricity bill, which is almost all of them.
The business lobby group has urged the next Prime Minister to cut energy costs for manufacturers and small firms, warning that the gap is widening with competitors in France, Germany, and the Netherlands. As reported by Minutehack, the CBI wants the next government to introduce a new industrial energy support scheme by 2026 and to accelerate grid connections for renewable projects. But the implications go far beyond factory floors.
What business energy costs have to do with your EPC rating
Here is the link most comment pieces miss. When a bakery, a car parts plant, or a small office pays 20p per kWh for electricity, that cost lands on your shopping basket and your council tax. The Office for National Statistics has tracked a 12% rise in the price of UK-manufactured goods directly correlated to industrial energy inflation over the past two years.
But there is a second, less obvious connection. The UK’s carbon pricing regime, the Emissions Trading Scheme, is applied to large industrial users. Those costs are then passed down the electricity supply chain. Ofgem’s latest wholesale electricity report shows that carbon costs now account for roughly 8% of the typical household bill. If the CBI’s proposed relief reduces industrial carbon costs, it could shave £40–£60 a year off a 3-bed semi’s electricity bill, assuming suppliers pass the saving on. That is not a given, but it is a plausible lever.
Yet the bigger prize is structural. The CBI is also calling for a review of network charging, which adds about £120 a year to the average domestic electricity bill. These charges are designed to recover the cost of the grid, but they are currently skewed towards electricity rather than gas, making heat pumps and electric vehicles look more expensive on paper than they actually are to run.
Who qualifies, and who doesn’t
The CBI’s proposal is explicitly for business, not households. But the history of UK energy policy is that what starts as industrial relief often ends up as domestic reform. The Climate Change Levy, introduced for business in 2001, was followed by the Carbon Price Floor in 2013. Both were eventually mirrored in household energy taxation.
The catch is that the next PM will have to choose between two approaches. One is to cut the green levies that fund home insulation and renewable subsidies, a move that would lower bills now but push the net-zero deadline further out. The other is to keep those levies but reform network charging so that electricity is cheaper to use at the times when wind and solar are generating most. The CBI’s submission leans towards the second, but it is not yet government policy.
For homeowners considering a heat pump, the current imbalance matters. At 28p per kWh for electricity versus 6p for gas, the running cost gap is about 22p per kWh. If network charging reform were to close that gap by even 5p, the payback period on a £12,000 heat pump installation would shorten by roughly two years. The Energy Saving Trust estimates that a typical 3-bed semi with a heat pump currently saves about £395 a year compared to an old gas boiler. That saving could rise to £520 with lower network charges.
What it means for your home upgrade plans
The CBI’s intervention is not a direct subsidy for loft insulation or solar panels. But it signals something important: the next government is likely to face pressure to make electricity cheaper, not just for factories but for everyone. That would change the economics of every green home upgrade.
Solar panels, which export electricity to the grid at a variable rate, would become more valuable if the price of grid electricity rises relative to gas. Battery storage, currently a niche add-on, would pay back faster if the spread between peak and off-peak electricity widens. And heat pumps, the technology most dependent on cheap electricity, would finally compete on running cost with gas boilers, not just on carbon.
For now, the immediate action for homeowners is to watch the autumn Budget. If the Treasury signals that network charging reform is on the table, the case for delaying a heat pump or solar installation weakens. If it does not, the current cost gap will persist, and the rational choice for most households remains a gas boiler with good insulation.
Either way, the CBI has done UK homeowners a favour by making the argument. The next step is to make sure that whatever relief business gets is extended, in some form, to the people who pay the bills, at home.
Frequently Asked Questions
Not directly, but it could lead to lower prices for goods and services, and it may create political pressure to reform network charging, which adds about £120 a year to the average domestic electricity bill.
It depends. If network charging reform happens within two years, the payback period for a heat pump could shorten. But waiting also means missing out on current grants like the Boiler Upgrade Scheme, which offers £7,500. A balanced approach is to install now and benefit from lower running costs if and when reform arrives.
