UK Energy Costs Rise as Policy Shifts Face Hurdle from Electricity Price Gap
UK households are facing rising energy costs just as policymakers aim to accelerate the shift away from gas heating and transport. The UK's average annual energy bill is set to reach a three-year high of £1,723 in October, with electricity prices remaining far higher than those for gas on a per unit basis.
The UK energy regulator's latest price cap will increase average household energy bills, maintaining the gap between electricity and gas prices at 3-4 times. This makes it less attractive for households to replace petrol cars and gas boilers with electric vehicles and heat pumps.
Aurora Energy Research projects that new renewable electricity supply in the UK will reach 117 TWh by 2030, while demand is expected to be only 31 TWh. This suggests that electricity consumption can increase without proportionally lifting overall system costs.
Removing residual levies from power bills would reduce the electricity-to-gas price ratio to 3.2 times, making well-installed heat pumps nearly competitive with unsubsidised gas boilers according to E3G analysis.