Most people in the UK recognise the need to switch away from fossil fuels. Gas, oil, and coal are all contributing to climate change and it’s why the UK government is making a big push for electrification. Ideally, the UK will reach net-zero emissions by 2050.
- The History Behind Why Electricity Is More Expensive Than Gas
- How Are Energy Prices Structured?
- The Role of Renewable Energy
- How Does Policy and Taxation Affect Electricity Prices?
- Infrastructure and Network Costs
- The Impact of Standing Charges
- What’s Being Done to Fix High Electricity Prices?
- How You Can Save Money on Electricity
- Future Outlook
This is all well and good, but it’s got many people wondering why, if electrification is the end goal, why is electricity so much more expensive than gas? Called the spark gap, electricity is around four times more expensive than gas.
We’ve answered everything you need to know about the spark gap here, covering exactly how much more expensive electricity is, why it’s pricier, what’s being done to fix this disparity, and how you can save money on electricity.
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Key Points:
Electricity is currently around four times more expensive than gas.
The cost of electricity is a huge barrier to people adopting low-carbon technology.
Two main issues make electricity more expensive than gas – global gas shortages and environmental taxes on electricity.
Shifting levies onto gas will help make wholesale electricity prices cheaper.
You can reduce electricity costs by adopting solar panels and generating your own electricity.
The History Behind Why Electricity Is More Expensive Than Gas
There wasn’t always this huge imbalance between the cost of electricity and gas in the UK. Prior to the influx of gas from the North Sea in the 1970s and ‘80s, electricity came primarily from coal and nuclear power.
When domestic gas became widespread, we started building gas-fired power stations and this led to the current system where gas influences electricity prices.
Also, when renewables started to take a greater share of the UK’s electricity generation, policymakers decided to fund wind and solar power through levies on electricity bills, rather than general taxation or gas bills.
The logic behind this was that electricity reaches virtually every home, so the costs would be spread evenly.
However, what’s actually happened is the cost of electricity has quietly piled up over the years, making the price of gas appear artificially cheaper - despite gas being a polluting fossil fuel that we regularly import.
Here’s a quick look at the difference between electricity and gas costs in 2025:
Energy Type | Unit Rate (pence per kWh) | Daily Standing Charge | Annual Cost for Typical Use* |
Electricity | 26.35p | 53.68p | £711 (2,700 kWh) |
Gas | 6.29p | 34.03p | £724 (11,500 kWh) |
*Typical use per Ofgem — 2,700 kWh electricity plus 11,500 kWh gas per year. Total capped dual-fuel bill: £1,755/year.
How Are Energy Prices Structured?
Your energy bill is more than just the cost of the fuel you use. It’s a whole mix of different factors, and because of decades of policy increasing the cost of electricity (more on that further down), it’s electricity that gets hit hardest.
Take a look at the table below for a breakdown of how energy prices are structured under the current Ofgem price cap (October–December 2025):
Cost component | Percentage of electricity bill | Percentage of gas bill | Notes |
Wholesale energy cost | 45–50% | 60–65% | Electricity is very often tied to gas prices |
Network costs (pipes & wires) | 25% | 20% | The electricity grid is more complex and expensive |
Environmental and social levies | 12–15% | 2–3% | ECO, RO, CfD (Contracts for Difference), Warm Home Discount etc. mostly on electricity |
Supplier operating costs and supplier margin | 8–10% | 8–10% | |
VAT | 5% | 5% | |
Standing charge | Fixed daily | Fixed daily | Electricity standing charges are considerably higher than gas (53.68p for electricity versus 34.03p for gas, on average) |
The Role of Renewable Energy
Renewable energy sources are often much cheaper per megawatt hour (MWh) than gas-fired power stations. Looking at wind power, it’s £40 per MWh versus £100 per MWh for gas, so how come the spark gap still exists?
Well as good as renewable energy is, there persist issues that need solving:
Renewable energy is intermittent — the wind can drop and the sun isn’t always shining. The UK needs to invest in more backup power solutions (such as grid-scale batteries) and interconnectors to Europe. This all costs a lot and keeps the price of electricity higher than gas for heating.
Ageing infrastructure — The UK’s electric grid was built around coal, gas, and nuclear power stations, and a lot of it is showing serious signs of age. In order to efficiently move power (wind power from Scotland to London, for example), billions must be spent in building new cables and substations.
Balancing costs — These are the expenses incurred to make sure the supply and demand of electricity is matched. It’s a complicated system, but basically it costs the system operator money to switch power plants on and off, and this cost is passed onto the consumer.
All these factors, and more, result in consumers paying extra on their electricity bills. The good news is that as the UK adds more renewables into the mix, and as infrastructure improves to accommodate them, renewables will dictate the wholesale price of electricity more than gas.
How Does Policy and Taxation Affect Electricity Prices?
Policy and taxation is comfortably the biggest reason behind the price disparity between electricity and gas. It’s the elephant in the room and the main hurdle blocking cheaper electricity for the UK.
Here are a few schemes currently impacting the cost of electricity:
Renewables Obligation (RO)
Contracts for Difference (CfD)
Feed-in Tariffs (FiT)
Warm Home Discount
To be clear, the schemes all provide benefits for UK consumers — the Warm Home Discount can take up to £150 off your electricity bill for example, and ECO (now ECO4) can help homes get funding towards heat pumps and solar panels.
The problem is that funding for these schemes comes from adding extra costs onto electricity. Gas escapes this burden for whatever reason, despite the fact it’s a much bigger polluter (around 85% of UK homes use gas for heating). This makes gas artificially cheaper than electricity.
Various industry bodies have long been arguing that these levies should be shifted onto gas and general taxation, which they say would make green technology such as heat pumps and EVs cheaper to run. The UK government is well aware of this, and consultations have been happening since 2023. Whether the government will actually do something to address the spark gap remains to be seen.
Read more:
UK Electricity Consumption Statistics: Trends, Drivers & Future Forecasts
Infrastructure and Network Costs
Electricity is inherently harder to deliver than gas, and thus more expensive. High-voltage transmission lines for example, are much more difficult to maintain and operate than low-pressure gas pipes.
And there’s the necessary infrastructure upgrades to accommodate the greater electrification of the UK. Heat pumps, EV chargers, and the growing number of data centres are all putting a bigger strain on the electricity grid than ever before, and upgrading the grid to cope with the increased demand is costing billions (companies have pledged up to £77bn over five years to help rewire the grid).
The bulk of these costs will be recovered through electricity bills.
The Impact of Standing Charges
Standing charges have become a big pain point in the spark gap. As of the current price cap (October–December 2025), it’s:
Electricity: 53.68p/day (£196 per year)
Gas: 34.03p/day (£124 per year)
The average standing price increased sharply after 2022, because of the energy crisis caused by a surge in global demand for energy after the COVID pandemic, and the invasion of Ukraine by Russia. Prices also shot up because of:
Energy supplier bailouts (from 2018 till 2025, over 50 energy suppliers have gone bust)
Higher bad debt
Network investment recovery
What’s particularly frustrating about standing charges is that you pay them even if you use zero energy - a sore spot for solar panel users and low-usage households. The only way to completely avoid standing charges is to go 100% off grid, but this is a drastic step with its own share of difficulties.
Also, standing charges differ by region, so where you live in the UK will affect how much you pay and unfortunately, the differences can be substantial. Take a look at our article on energy prices by UK region for more information.
The Push for Electrification
The UK government has announced it wants 600,000 heat pumps installed per year by 2028, but with electricity prices being what they are, it’s a tall ask to get that many households to switch. It’s the same story with EV chargers frankly — we need to move away from fossil-fuel hungry petrol/diesel cars, but it’s hard to ask households to adopt an EV if it’s so expensive to charge them.
What the government can do is rebalance the levies on electricity, which would make heat pumps much cheaper to run. We estimate doing so could make running a heat pump £300–£500 cheaper per year. This would be a big boost to electrification and make heat pumps much more appealing to your average UK household.
It’d also be a clear step towards the government’s net-zero ambitions and a massive win for the environment.
What’s Being Done to Fix High Electricity Prices?
Thankfully, the UK isn’t sitting on its hands when it comes to fixing the spark gap, with positive developments happening right now.
Ofgem and DESNZ (Department for Energy Security and Net Zero) for example, are actively working on shifting policy costs from electricity to gas. This'll make a huge difference in balancing the wholesale costs of electricity compared to gas.
Right now, around £150–£200 per year of green and social levies sit only on electricity bills.
Moving even half of these to gas (or general taxation) would cut roughly 6–8 per kilowatt hour (kWh) off electricity unit rates overnight.
The government is also planning on partly funding the Warm Home Discount scheme via gas bills, which is a first. From 2026, this process will remove around 1.3p per kWh from electricity costs. Might not sound like a lot, but in energy bills it’s all cumulative and will make a noticeable difference.
Additionally, there’s the proposed levy reforms on initiatives such as ECO (which in 2026 will launch ECO5). If funding for ECO5 comes from levies on gas, it could shave another 2-4p per kWh off electricity prices.
Then there’s a proposal from the UK government to remove the 5% VAT on domestic electricity. The thinking is that this'll make energy bills cheaper for all, but some experts believe this could backfire (costing the exchequer some £2.5bn a year) and might primarily benefit larger homes with larger energy bills.
How You Can Save Money on Electricity
All this talk of policy changes is all well and good, but it’s not going to reduce your energy bills right away. So, here are a few things you can do to start shrinking your electricity costs while we wait for policymakers:
Change tariffs — Shopping around and swapping to a new energy tariff can be a great way to save a bunch of cash. Take a look at our article on energy tariff comparisons to get an idea of how you can switch tariffs, and what you could save on your bills.
Generate your own electricity — Investing in a solar panel plus battery storage setup is a great way to reduce your reliance on the grid for your electricity (and subsequently shield yourself from dramatic price fluctuations). If you get battery storage, consider opting for a battery storage tariff.
Get a smart meter — A smart meter alone won’t save you money, but using the knowledge it gives you can help your usage habits, and thus help reduce your bills.
Read more:
13 Quick Ways to Reduce Energy/Electric Bills UK
Future Outlook
The future is bright, as long as the UK continues on improving grid infrastructure, shifting levies onto gas, and increasing the share of renewable energy sources into the country’s electricity mix. Particularly the latter, as more renewables means wholesale prices of electricity will fall, because they’re simply much cheaper per MWh than gas.
Wind power is growing, with offshore wind ramping up to a colossal 50 gigawatts by 2030, and the emergence of alternative fuels such as green hydrogen will reduce our reliance on gas (and the cost of electricity as a result).
Thinktank Cornwall Insight, in conjunction with the National Grid, predicts electricity could be genuinely cheaper to run than gas for heating within 5–10 years — great news for any heat pump owners!
It’s also a good incentive to consider future-proofing your home by getting a heat pump installed now. We can help get you an obligation-free quote in minutes by simply answering a few questions.
If you’d like to start generating your own electricity, we can help with that too. We offer MCS-certified solar panel installation across the country. All you need to do is answer these questions, get your fixed price and arrange your free design.
Next Steps For Your Solar Journey:
When planning to install solar panels for your home, there are several important factors to consider. Make sure to refer to the following guides to help you make informed decisions:
To dive deeper into these topics, head over to our advice section, check out our YouTube channel for informative videos, or read a customer case study to see how others have benefited from their solar installation.
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